Polycab India IPO Opens. Should You Subscribe?
Polycab India's IPO or initial public offer opened for subscription on Friday. The Mumbai-based Polycab India is a manufacturer and marketer of a range of electrical products such as wires and cables. The Polycab IPO worth up to Rs 1,346 crore comprises of a fresh issue worth Rs 400 crore and an offer for sale (OFS) worth up to Rs 946 crore by its promoters Inder T Jaisinghani, Ajay T Jaisinghani, Ramesh T Jaisinghani and Girdhari T Jaisinghani, according to the company's red herring prospectus filed with markets regulator Sebi. The company aims to utilise the proceeds towards repayment of debt, working capital requirements and general corporate purposes. (Also read: Should you subscribe to Metropolis Healthcare IPO?)
Here are 10 things you need to know about the Polycab IPO:
1. Subscription
By 5:30 pm, the IPO had received 1,25,93,691 bids, marking a 71.4 per cent subscription, according to data from the NSE.
2. Important dates
The Rs 1,346-crore Polycab IPO opened for subscription on April 5, and will close on April 9.
3. Company profile
The company is engaged in the business of manufacturing and selling of wires, cables and fast-moving electrical goods under the Polycab brand. It is the largest manufacturer of wires and cables in the country in terms of revenue from the wires and cables segment, according to CRISIL Research. Its FMEG products include electric fans, LED lights, switches, switchgears, solar goods, conduits and accessories.
4. Market share
The company has a market share of approximately 18 per cent in the organised wires and cables industry (financial year 2018), and approximately 12 per cent of the total wires and cables industry in the country, according to CRISIL Research. Polycab India has 24 manufacturing facilities (including two joint ventures with Techno Electromech and Trafigura) located in Gujarat, Maharashtra and Uttarakhand, and Daman and Diu.
5. Company financials
Its revenue from operations stood at Rs 6,923.92 crore for the financial year ended March 31, 2018, as against Rs 6,047 crore for the corresponding period a year ago. Polycab's net profit rose 59.2 per cent to Rs 370.37 crore for the financial year 2017-18.
6. Risk factors
Internal
Stating various risks associated with its business, the company has said that its operations depend on the price and availability of raw material, significant increases/fluctuations in the price or supply of raw material could affect its estimated costs, expenditures and timelines.
"Any adverse changes in the conditions affecting the wires and cables market can adversely impact our business, financial condition, results of operations, cash flows and prospects," the company mentions in its red herring prospectus.
External
According to the company, its performance is subject to seasonality, with its sales tending to be relatively higher in the second half of financial year compared to the first half.
7. Price band
Polycab has set a price band of Rs 533-538 apiece for the IPO. It is offering over 17.63 crore shares under the offer for sale, which will lead to raising of about Rs 949 crore for the company.
8. Lot size
Shares under the Polycab IPO can be subscribed in the lots of 27 shares. This means that investors can subscribe to the IPO at a minimum of Rs 14,391-14,526.
9. Utilization of proceeds
A portion of the funds raised from the IPO may be utilized for repayment or pre-payment of loans taken from Citibank NA, an affiliate of Citigroup Global Markets India, according to the red herring prospectus.
10. What analysts say
Brokerage Angel Broking has given a "subscribe" rating to the issue. Polycab's market leadership position in the wires and cables segment, diversified product portfolio, strong distribution network and brand recall, and proven financial track record are its key positives, according to Angel Broking.
