Bansal Wire shares up 33% after a strong listing; Should investors buy, sell or hold?

Bansal Wire shares: After witnessing solid demand for its initial public offering (IPO), shares of Bansal Wire Industries listed on the BSE and the NSE with healthy gains on Wednesday, July 10, defying weak market sentiment.

Bansal Wire share price was listed with a 37.52 per cent premium at ₹352.05 per share on the BSE, while on the NSE, the stock debuted with a premium of 39.06 per cent at ₹356 apiece. The issue price of Bansal Wire shares was ₹256.

The stock, however, pared some gains and traded 33.40 per cent higher at ₹341.50 on BSE around 10:50 am. Equity benchmark Sensex was 1 per cent down at 79,560 at that time.

The stainless-steel wire manufacturer company raised ₹745 crore from the book-built issue. Its IPO was entirely a fresh issue of 2.91 crore equity shares. The price band for the issue was ₹243 to ₹256 per share.

Bansal Wire IPO opened for subscription on July 3 and closed on July 5. It saw a strong subscription of 59.57 times, receiving bids for 127.85 crore equity shares against 2.14 crore shares on the offer.

The retail category of the offer was subscribed to 13.64 times, while the non-institutional investors' (NII) segment saw a subscription of 51.46 per cent and the qualified institutional buyers (QIBs) category subscribed to 146.05 times.

What should investors do now?

Experts see long-term growth prospects for the company but believe the current valuations are stretched. Investors may consider booking profit for short-term gains, but those with long-term horizons may hold their positions.

Shivani Nyati, the head of wealth at Swastika Investmart, pointed out that Bansal Wire shares surpassed pre-listing expectations with a stellar debut on the stock exchanges.

Nyati advises investors to hold their positions even as she highlights that the company operates in a highly fragmented and competitive market

"The company received a robust subscription, highlighting significant investor confidence in Bansal Wire's established position, diverse product portfolio, and consistent financial performance. However, it operates in a highly fragmented and competitive market," said Nyati.

"Overall, Bansal Wire's listing performance surpasses pre-listing expectations and signifies investor confidence in the company's potential. However, careful consideration of the identified risks is still crucial. Investors are advised to hold their position with a stop loss of ₹321," Nyati said.

"The metal wire industry is a highly competitive and fragmented market for the company. After listing, we recommend investors to book profits," said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.

Prashanth Tapse, a research analyst and senior VP of research at Mehta Equities pointed out that the Bansal Wire listing was in line with his expectations, considering the demand received from all types of investors.

Tapse sees valuations are getting stretched, so investors may consider booking profits after a healthy debut.

"Post listing above 38 per cent of the issue price gives a healthy opportunity to allotted investors to book profits as we had anticipated. We see the valuations are getting stretched post-listing, and the upside would be limited from here," said Tapse.

Tapse pointed out that despite industry challenges and a stable margin business model, management is confident that the company will experience multi-segmental growth. He believes that the company can consistently grow its topline in line with historical trends, which have grown by 18 per cent CAGR, and that, due to business consolidations, it can grow more in the next year.

Parth Shah, a research analyst atStoxBox, pointed out that the issue is fairly valued on the financial front. He advises market participants to hold the shares from a medium to long-term perspective.

Shah is positive about the company's growth prospects as the company boasts strong customer diversification to de-risk impact on revenue and a diversified product portfolio.

Shah underscored the increase in steel consumption across infrastructure. He believes steel manufacturers are expected to benefit directly from domestic economic growth.

"To follow up with the growing trends, the company plans to set up a new manufacturing unit, the largest steel wire manufacturing plant in India. The company also aims to expand its reach to other regions, i.e., the south and east, to garner additional market share," Shah observed.

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