Bansal Wire’s IPO Sees Considerable Response, Subscribed 59 Times

Delhi-headquartered Stainless Steel (SS) wire manufacturer, Bansal Wire Industries Ltd., rolled out its Initial Public Offering (IPO) on 3rd July 2024, which remained open for subscription till 5th July 2024. The Rs. 745 crore-issue, which consisted entirely of fresh shares, saw a massive response with the IPO being subscribed 59.57 times.

Bansal Wire had filed the Draft Red Herring Prospectus (DHRP) with SEBI for its IPO in January 2024

QIBs Subscribed the Most to IPO, NIIs and Retail Investors show Warm Response

As per a report by Mint dated 8th July 2024, Bansal Wire’s IPO was subscribed 146.05 times by Qualified Institutional Buyers (QIBs). Non-Institutional Investors (NIIs) subscribed 51.46 times to the issue, while retail investors showed a relatively tepid response, subscribing to the issue 13.64 times. Therefore, mostly backed by QIB subscription, the overall subscription the IPO was 59.57 times.

About Bansal Wire Industries

Incorporated in 1985, Bansal Wire is one of the major producers of SS wire in India. For FY-24, the company had reported a top line of Rs. 2,470.89 crore, and a Profit After Tax (PAT) of Rs. 78.80 crore.

As per the company, it is the largest SS wire manufacturer in India with a production capacity of 72,176 Metric Tonne Per Annum (MTPA). The company also claims to be the second largest Steel wire manufacturer in the country with a capacity of 206,466 MTPA. In FY-23, Bansal Wire held 20% of India’s SS wire market share.

The company has four manufacturing facilities in the National Capital Region (NCR), three of which are situated in Ghaziabad, UP and one in Bahadurgarh, Haryana. Apart from this, Bansal Wire is in the process of setting up its largest single-location Steel wire plant in Dadri, UP.

Proceeds to be Used to Settle Borrowings, Working Capital Requirements

In its Red Herring Prospectus (RHP), Bansal Wire mentioned that out of the proceeds from this IPO, Rs. 452.68 crore will be used for ‘repayment or prepayment’ of Bansal Wire’s borrowings. As explained by the company, its total borrowings stood at Rs. 676.28 crore as on 31st May 2024.

Apart from this Bansal Wire will invest Rs. 93.70 crore in its subsidiary for the payment of ‘all or a certain portion’ of outstanding borrowings. Bansal Wire did not specify the name of the said subsidiary in the RHP document but submitted that it owes a total of Rs. 103.92 crore to the State Bank of India as on 31st May 2024.

Further, Rs. 60 crore from the IPO proceeds will be used to fund Bansal Wire’s working capital requirements. Other than this, the proceeds from Bansal Wire’s issue will be used for ‘general corporate purposes’, provided not more than 25% of the gross proceeds from the IPO are used for this purpose.

Bansal Wire clarified that the company intends to utilise the IPO proceeds during FY-25. If for any reason there are any unused funds from the IPO at the end of FY-25, the company will then use them during FY-26.

Details of the Issue

Shares Offered at Rs. 243-256 Apiece

Bansal Wire had offered 2.91 crore fresh shares in this IPO, each with a face value of Rs. 5. The shares had been offered in a price band of Rs. 243 to Rs. 256 apiece, and the lot size had been specified as 58 shares. This translated to a minimum investment of Rs. 14,848 for retail investors.

For small Non-Institutional Investors (sNII), the minimum purchase was set at 14 lots (Rs. 2,07,872 worth of shares), and for big NIIs (bNII) it was 68 lots (Rs. 10,09,664 worth of shares). Bansal Wire was expected to be listed on the stock exchanges (BSE and NSE) on 10th July 2024.

Allotment of Shares based on Investor Classes

Out of the total shares, 30% of the shares had been offered to anchor investors. These include SBI Flexicap Fund, HDFC Mutual Funds, SBI Life Insurance Co. Ltd. HSBC Flexi Cap Fund, Tata Infrastructure Fund, and more.

QIBs had been offered 20% of the issue, while High Net-worth Individuals had been offered 15% of the shares. bNIIs and sNIIs had been offered 10% and 5% of Bansal Wire’s IPO, while the remaining 35% of the issue was open for retail buyers.