Flair Writing Industries IPO Soars, Stocks Debut With A Remarkable 66% Premium
Flair Writing Industries (Flair), a company manufacturing stationery products that aimed to raise approximately Rs 595 crore through an IPO, made its debut in the last trading session of the week.
Flair joined the premium listing rally and commenced with a 66 per cent premium listing at Rs 503 on the Bombay Stock Exchange (BSE) against its issue price of Rs 304.
Following corrections in this week's listed IPOs, including Tata Technologies, Gandhar Oil Refinery, and IREDA, Flair also corrected and traded at Rs 450, marking a 48.32 per cent increase on the National Stock Exchange, trimming its listing gains.
"Flair’s listing exceeded expectations, given the strong fundamentals of the company and the positive investor sentiment surrounding the IPO. Flair Writing is a leading manufacturer of writing instruments in India with a well-diversified product portfolio and a strong brand reputation. The company has a proven track record of growth and profitability. Overall, Flair Writing Industries is a fundamentally sound company with a strong growth outlook," said Shivani Nyati, Head of Wealth at Swastika Investmart.
The IPO opened on 22 November with a combination of fresh equity and an offer-for-sale (OFS) portion. From the OFS issue, the company was expected to receive net proceeds of Rs 292 crore. Notably, the IPO was oversubscribed 49.28 times, indicating strong investor interest.
The firm proposed investing the net proceeds, allocating Rs 56 crore for establishing a new writing instrument facility in Valsad, Gujarat, and Rs 86.7 crore for funding capital expenditure at the subsidiary level.
The company also intended to utilise Rs 77 crore to fund working capital requirements, and an additional Rs 43 crore would be used for debt repayment.
On 10 November 2023, Flair, in consultation with the BRLMs, executed preferential allotment of 24 lakh shares to Volrado Venture Partners Fund, a fund managed by Enam Holdings, at Rs 304 per share, realising a total amount of Rs 73 crore.
Subsequently, the fresh issue was reduced to Rs 292 crore, compared to the initially proposed Rs 365 crore filed in the draft red herring prospectus (DRHP).
Nuvama Wealth Management and Axis Capital were the book running lead managers, while Link Intime served as the registrar to the issue.
"Flair has a substantial market share in the domestic writing instruments market. Going forward, the pen sales volume growth is likely to moderate compared to the growth during FY 21-23, but will remain higher than the volume growth reported during FY 17-23. Further, new product launches with innovative designs are likely to improve blended pen realisations. Moreover, improved penetration of other products like creative stationery items, houseware, and steel bottles will further boost top-line growth," as earlier stated by Choice Broking.
