Flair Writing Industries IPO Review: Ever doodled in class with a pen? What if that pen came from a company older than your school memories? India’s oldest pen company is stepping into the spotlight with its first-ever IPO.
The IPO will open for subscription on November 22, 2023, and close on November 24, 2023. In this article, we will look at the Flair Writing Industries IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out!
Table of Contents
Flair Writing Industries IPO – About The Company
Flair Writing Industries Limited is one of the top three players in the overall writing instruments industry in India. As of FY23, the company has captured a market share of approximately 9% in the overall writing and creative instruments industry in the country.
The company offers a wide range of products at different price points to cater to a diverse set of customers, including students, professionals, and offices. They manufacture and distribute writing instruments, which include pens, stationery items, and calculators.
Additionally, the company has recently forayed into manufacturing a wide range of houseware products including bottles, storage containers, casseroles, serving solutions, cleaning solutions and basket and paper bins, through one of its Subsidiaries, FWEPL.
The company manufactures pens and other products from 11 manufacturing plants located in Naigaon, Maharashtra; in Valsad, Gujarat; in Daman, Union Territory of Dadra and Nagar Haveli and Daman and Diu; and in Dehradun, Uttarakhand.
About The Industry
The following are the estimates of the industries under which the company operates:
The Indian writing and creative instruments industry is dominated by organized players and is estimated to expand at a CAGR of 7.7% to 8.4% from 2023 to 2028, with the pen segment increasing at a CAGR of 7.5% to 8.5% during the same period.
The Indian steel bottle industry is highly fragmented and is anticipated to grow at a CAGR of 14% to 16% over the Financial Years 2023 to 2028.
As of March 31, 2023, the Indian homeware industry is expected to be around ₹400 to ₹450 billion with the kitchen appliances segment occupying a share of 40% to 45%.
Flair Writing Industries IPO Review – Financials
If we look at the financials of Flair Writing Industries Limited we notice that their assets have roughly doubled from Rs.480.66 crores in March 2021 to Rs. 684.18 crores in March 2023.
Similarly, its revenue has tripled from Rs. 310.87 crores in March 2021 to Rs. 954.29 crores in March 2023.
The net profit of the company also shows a significant increase from Rs. 0.99 Crores in March 2021 to Rs. 118.1 Crores in FY23. For FY23 the net profit margins of the company stood at 12.53%.
Coming to the return ratios, we can see that, it has an exceptional ROE of 31.24% and a RoCE of 31.17% as of FY23. This indicates an exceptional return on the capital invested by the shareholders and an optimum use of company resources.
Another positive aspect of the company is that it reported a debt-to-equity ratio of 0.26 during FY23. This means the company majorly uses its own funds to run its operations.
Key Players in the Market
The following image shows the comparison of Flair Writing industries with its listed industry peers.
Strengths of the Company
- The company is among the top three players in the writing instruments industry and occupies a market share of approximately 9%.
- According to CRISIL, the company has the most comprehensive product portfolio in the writing and creative instruments industry.
- The company’s multi-tiered nationwide domestic sales and distribution network enables its products to reach a wide range of consumers and helps to ensure effective market penetration across geographies.
- The company has ties with international brands in the writing instruments industry and is one of the largest exporters of writing and creative instruments in India.
- The company has introduced automatic and semi-automatic assembly and packing machines and endeavours to control its manufacturing processes by increasing backward integration and reducing dependence on external suppliers.
Weaknesses of the Company
- The company is primarily dependent on party suppliers for the supply of raw materials. Any increase in price or disruption of the raw materials can have an adverse effect on the business
- Any disruption in the supply of raw materials from third-party suppliers can disrupt the company’s flow of operations
- The company requires significant working capital to run its operations. Failure to acquire such capital can significantly impact the operations of the company.
- The company depends on the estimate of the long-term demand for the products from their customers. An inability to accurately forecast demand for the products and manage the inventory can adversely affect the business.
- The company operates in a competitive business environment. Competition from existing players and new entrants in the industry could have an adverse effect on the business.
Flair Writing Industries IPO Review – GMP
The shares of Flair Writing Industries Limited traded at a premium of 9.38% in the grey market on November 14th, 2023. The shares tarded at Rs 35. This gives it a premium of Rs 3 per share over the cap price of Rs 32.
Flair Writing Industries IPO – Key IPO Information
| Particulars | Details |
|---|---|
| IPO Size | ₹593.00 Cr |
| Fresh Issue | ₹292.00 Cr |
| Offer for Sale (OFS) | ₹301.00 Cr |
| Opening date | November 22, 2023 |
| Closing date | November 24, 2023 |
| Face Value | ₹5 per share |
| Price Band | ₹288 to ₹304 per share |
| Lot Size | 49 Shares |
| Minimum Lot Size | 1 |
| Maximum Lot Size | 13 (637 shares) |
| Listing Date | December 5, 2023 |
Promoters: Mr. Khubilal Jugraj Rathod and Mr. Vimal Jugraj Rathod.
Book Running Lead Manager: Nuvama Wealth Management Limited and Axis Capital Limited
Registrar to the Offer: Link Intime India Private Limited
The Objective of the Issue
The following are the objectives of the issue:
- To set up a new manufacturing facility for writing instruments in District Valsad, Gujarat
- Funding the capital expenditure and working capital requirements of the company and its Subsidiaries.
- Complete or partial repayment/pre-payment of certain borrowings availed by the Company and its Subsidiaries, FWEPL and FCIPL.
- General corporate purposes
In Closing
In this article, we looked at the details of Flair Writing Industries IPO Review 2023. Given the company’s strong presence in the writing and creative instruments industry, its expanding product segments and strong financials, it can be said that the outlook of the company is favorable for the future.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Aaron Vas
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks also get updated with stock market news, and make well-informed investment.
