Plaza Cables IPO kicks off: Should you subscribe to the issue? Here's what analysts say

The Rs 71.28 crore-initial public offering (IPO) of Plaza Wires opens for bidding on Friday, September 29. The company is selling its shares in the price band of Rs 51-54 apiece with a lot size of 277 shares and in multiples thereof. The three-day bidding for the IPO will close for bidding on Wednesday, October 4.

Plaza Wires, which was incorporated in 2006, manufactures and sells wires and cables. The company sells and markets LT aluminium cables and fast-moving electrical goods (FMEG) under its flagship brand named as 'Plaza Cables' and home brands named 'Action Wires' and 'PCG'.

The issue is entirely a sale of a little more than 1.32 crore fresh equity shares. Pantomath Capital Advisors is the sole manager to the issue, while Kfin Technologies is the registrar. Plaza Wires raised Rs 20 crore from two anchor investors namely- Chanakya Opportunities Fund I and Astrone Capital UCC-Arven- who have 18.52 lakh equity shares each in the company at Rs 54 per share.

The company intends to utilize the net proceeds from the issue towards the funding the capital expenditure towards setting up a new manufacturing unit for house wires, fire-resistant wires & cables, aluminum cables, and solar cables to expand the product portfolio; funding the working capital requirements and general corporate purposes.

"The issue is valued at a P/E of 22 times based on FY2023 earnings which prices in most of the positives of the company. It is important to note that Plaza Wires operates in an industry which has high raw material volatility. The business operates in a highly competitive industry with multiple big players which can challenge the pricing power," said StoxBox with an 'avoid' rating.

Plaza Wires was previously known as Navratna Wires. It offers house wires, single and multi-core round flexible industrial cables and industrial cables for submersible pumps and motors up to 1.1 kv grade. It provides other wires and cable products through third-party manufacturers.

Plaza Cables has a network of more than 1,249 authorised dealers and distributors. It has three branch offices each in Rajasthan, Uttarakhand, and Uttar Pradesh; one branch office in Maharashtra, four warehouses in Uttar Pradesh, Assam, Kerala and Delhi.

Plaza Cables clocked a net profit of Rs 7.51 crore in the financial year 2022-23, which stood at Rs 5.95 crore in the financial year 2021-22 and Rs 4.24 crore in the financial year 2020-21. Its revenue in the preceding three financial years stood at Rs 182.60 crore, Rs 176.94 crore and Rs 145.60 crore, respectively.

The company has reserved 75 per cent equity shares for qualified institutional bidders (QIBs), while non-institutional institutional (NIIs) will have 15 per cent shares reserved for them. Remaining 10 per cent shares will go to retail investors. Shares of the company will be listed on both NSE and BSE.


Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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