Polycab India Limited IPO Details, Analysis, Subscription & Discussion

polycab-ipo-products

Polycab India Limited IPO Issue Details:

IPO date:                  05 April – 09 April 2019
Issue Size:                1346 Cr
Offer Price:              Rs 533 – Rs 538 Per Equity Share
Market Lot:              27 Shares & multiples
Exchange Listing:   BSE, NSE

IPO Tentative Schedule Dates:

Allotment & refund:    15 April
Credit to Demat:           16 April
Listing on Exchange:   18 April

Company Promoters: Jaisinghani brothers

Objective of the Issue: Mixture of the Offer for sale and Fresh issue for repayment of certain borrowings and to fund working capital requirement.

IPO Registrar: Karvy computershare private limited

Company Overview:

Incorporated in 1996, Mumbai based Polycab India Limited engaged in the business of manufacturing and selling wires, cables & fast moving electrical goods (“FMEG”) under the “POLYCAB” brand.  Polycab India is the largest manufacturer in the wires and cables industry in India, in terms of revenue from the wires and cables segment.

Polycab has a market share of approximately 18% of the organized wires and cables industry. Apart from wires and cables, company manufactures and sells FMEG such as electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits and accessories.

Business Operation:

The company expects the Ryker Plant to commence commercial operations by the end of Fiscal 2019, with an estimated annual capacity of 225,000 MT of copper wire rods once it is fully operational.

Company’s focus on research and development (“R&D”) capabilities, emphasis on upgrading the technology used in our production process, customer-centric R&D efforts and R&D center located in Halol, assist our sales and marketing team in understanding customers’ requirements.

In addition, company has adopted automation systems in  manufacturing process such as the manufacturing execution system (“MES”), which is an automated sensor base system for recording the actual consumption of raw materials in production, as well as enterprise resource planning (“ERP”) systems. The company has also opted the Maynard Operation Sequence Technique (“MOST”) to drive productivity and optimize capacity utilization.

The company website: polycab.com

Polycab India Ltd IPO Analysis:

Financial Performance:

polycab-india-ipo-financials

Valuations as on 31st Mar 2018:
1. Earning per share (EPS): 26.23
2. Price to Earning ratio (P/E): 20

Company category:  fast-grower

Company Strength:

  • Market leader in premium quality wires and cables in India. Company holds 18% market share in organized wires and cables industry.
  • Cost effective operations and In-house R&D capabilities.
  • Strong distribution network with undertaken Key initiatives include customer relationship management (“CRM”) programme, Bandhan, and Project Josh.
  • Strategically located warehouses with focus on automatic storage and retrieval system (“ASRS”)
  • High degree of backward integration such as shorter trade receivables cycle and well managed inventory turnover.
  • Ryker Plant to commence commercial operations by the end of Fiscal 2019 which will add in to the business income.

Company Risks:

  • Significant competition in electrical business industry.
  • The business is more prone to supply of raw materials.
  • labor-intensive industry and are subject to stringent labor laws
  • Company & promoters are involved in certain criminal and civil legal proceedings.
  • The company has certain contingent liabilities.

Field Analysis:

  • As per visit to various electrical retailers, I have found that in premium quality wires and cables segment, Polycab is the most demanding by people despite of higher prices.
  • Their wallfans are of good quality and other FMEG products have more demand in Mumbai.

Peer Comparison:

Polycab peer comparison1

Polycab peer comparison2

Analysis Conclusion:

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  • Market leader in growing premium wires & cables industry, focused In-house R&D, cost-effective and improving operations, strategic & customer centric key initiatives are the plus.
  • On upper price band, company offers price to earnings (P/E) of 20 which is much below the industry average and competitors.
  • Also, better GMP (Grey Market Price) & other favorable factors suggest to show POSITIVE view for LISTING GAIN. So my say is SUBSCRIBE to the IPO at upper price band.

Polycab India Ltd IPO subscription status:

polycab-india-ipo-subscription-figures

Abbreviations:

EPS – Earning per share
P/E – Price to Earning
RoE – Return on Equity
QIB – Qualified Institutional Buyer
NII – Non-Institutional Investors
RII – Retail Individual Investor

Disclaimer & Conflict of Interest:

The above analysis is based on my understanding of the company and RHP of Polycab Limited. You should research more and consult your financial adviser before taking any decision. I am going to apply to the IPO.

2 comments

  1. Polycab India IPO oversubscribed by 51.88x on last day. Such a overwhelming response. Hoping for superb listing. Stay tuned for latest news here.

    Like

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