Flair Writing Industries Limited IPO

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Industry Positioning: The company is a major player in the writing instruments industry, ranking among the top three in India. As of Financial Year 2023, it holds a significant market share of approximately 9%, and it is recognized for faster revenue growth compared to the overall industry.

Financial Performance: The company has demonstrated strong financial performance, achieving a revenue of ₹9,155.5 million in Financial Year 2023. It reported the highest operating and net income margins of 17.8% and 9.6%, respectively, in Financial Year 2022 among key players in the writing instruments industry.

Product Portfolio: The company’s flagship brand “Flair” has a market presence of over 45 years. The product range includes various writing instruments such as pens, stationery products, and calculators. The company caters to a diverse consumer base, including students, professionals, and offices, with products available across different price points.

Market Presence: The company boasts the largest distributor/dealer network and wholesale/retailer network in the writing instruments segment in India. As of March 31, 2023, it comprises approximately 7,700 distributors/dealers and approximately 315,000 wholesalers/retailers.

Global Reach: The company has a global footprint, exporting a significant percentage of its products. In the three-month period ended June 30, 2023, 18.91% of pens were exported globally, and in Financial Year 2023, 25.18% of pens were sold in the international market.

Brand Portfolio: The company manages multiple brands, including “Flair,” “Hauser,” “Pierre Cardin,” and the recently introduced “ZOOX.” These brands cater to different market segments, offering mass-market, premium, mid-premium, and premium writing instruments.

Diversification: Beyond writing instruments, the company has diversified its product portfolio to include houseware products and steel bottles. It recently entered the steel bottle manufacturing industry, leveraging its manufacturing capabilities and established relationships with key OEM customers.

Strategic Growth Initiatives: The company plans to utilize the proceeds from an offer to fund the expansion of its manufacturing capacity for writing instruments and to further optimize the business of houseware products and steel bottles. The steel bottle industry in India is projected to grow, and the company has received a letter of intent from a key OEM customer.

Manufacturing Infrastructure: The company operates 11 manufacturing plants located in Valsad, Gujarat; Naigaon (near Mumbai), Maharashtra; Daman, Union Territory of Dadra and Nagar Haveli and Daman and Diu; and Dehradun, Uttarakhand.

Objects of the Flair Writing Industries Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: 1. Setting up a new manufacturing facility for writing instruments in District Valsad, Gujarat (New Valsad Unit); 2. Funding capital expenditure of the company and its subsidiary, FWEPL; 3. Funding working capital requirements of the company and its subsidiaries, FWEPL and FCIPL; 4. Repayment/pre-payment, in part or full, of certain borrowings availed by the company and its Subsidiaries, FWEPL and FCIPL; and 5. General corporate purposes. The total number of shares are issues: - i. Fresh Issue is 9,605,263 shares, ii. Offer for Sale is 9,901,315 shares.
DRHP of Flair Writing Industries Limited IPO
RHP of Flair Writing Industries Limited IPO

Flair Writing Industries Limited IPO Details:

Open Date: Nov 22 2023
Close Date: Nov 24 2023
Total Shares: 19,506,578
Face Value: ₹ 5 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 593 Cr.
Lot Size: 49 Shares
Issue Price: ₹ 288 - 304 Per Equity Share
Listing At: NSE,BSE
Listing Date: Dec 05 2023

Promoters And Management:

Mr. Khubilal Jugraj Rathod is the Chairman and a Whole-time Director of the Company. He has been a Director since incorporation of the Company, i.e., since August 12, 2016. He has completed matriculate education. He has over 48 years of experience in the writing instruments industry. He has received the Lifetime Achievement Award and the Udyog Rattan Award from the Institute of Economic Studies, the Life time Achievement Award from The Bombay Fountain Pen Manufacturers and Traders Association, the award for the ‘Most Admired Leader’ from Herald Global, Inspirational Leaders of New India award from Powerbrands Glam, Las Vegas, USA, Life time Achievement Award from the Honorable Governor of Uttarakhand and the ‘Achiever’ Award from the Junior Chamber International, Marine Lines. He is responsible for providing overall guidance and vision in development of new factory units and taking decisions in day to day business activities of the Company Mr. Vimalchand Jugraj Rathod is the Managing Director of the Company. He has been a Director since incorporation of the Company, i.e., since August 12, 2016. He is a fellow member of the Institute of Chartered Accountants of India. He holds a Bachelor of Commerce degree from Bangalore University, Bengaluru, Karnataka. He has over 40 years of experience in the writing instruments industry. He has received “Asia’s Most Promising Leader 2015-16” award from World Consulting and Research Corporation, “Award of Appreciation” from the Pen and Stationery Association of India and award from the PlastIndia Foundation. He was previously the chairman of the Plastic Export Promotion Council and currently the chairman of the Pen and Stationery Association of India Mr. Rajesh Khubilal Rathod is a Whole-time Director of the Company. He has been a Director since incorporation of the Company, i.e., since August 12, 2016. He holds a Bachelor of Commerce degree from the University of Bombay, Mumbai, Maharashtra. He has over 33 years of experience in the writing instruments industry. He heads the international sales and marketing division along with global relationship development of the Company.

Financials of Flair Writing Industries Limited IPO:

A. Balance Sheet
Particular (In Million) Mar-21 Mar-22 Mar-23
Equity Share Capital 233.47 233.47 466.94
Reserves 2,383 2,936 3,883
Borrowings 1,303 1,263 1,156
Trade Payables 411 503 636
Other Liabilities 477 639 701
Total Liabilities 2,191 2,405 2,492
Net Block 1,764 1,901 2,401
Capital Work in Progress 0 18 16
Other Assets 178 134 319
Total NC Assets 1,943 2,052 2,736
Receivables 1,158 1,470 1,707
Inventory 1,314 1,843 2,138
Cash & Bank 7 3 8
Other Assets 385 207 254
Face value 5 5 5
B. Profit & Loss Statement
Particular (In Million) Mar-21 Mar-22 Mar-23
Sales 2,980 5,774 9,427
Raw Material Cost 1,461 3,336 5,082
Purchases of Stock In Trade 48 47 62
Change in Inventory 156 -302 -55
Employee Cost 584 878 1,173
Other Expenses 502 838 1,330
Other Income 129 102 116
Depreciation 224 244 273
EBITDA 359 1,078 1,951
EBITDA Margin 12.04% 18.67% 20.70%
Interest 113 100 90
Profit before tax 21 734 1,588
Tax 11 183 407
Net profit 10 552 1,181
NPM (%) 0.32% 9.39% 12.38%
C. Cash Flow Statement
Particular (In Million) Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 308 1,061 1,951
Receivable 626 -313 -247
Inventory 188 -529 -295
Payable -321 92 133
Loans And Advances 0.8 -0.4 -1
Other WC Items -195 148 -143
Working Capital Changes 298 -603 -553
Direct Taxes -2 -108 -434
Net Cash Inflow from Operating Activity 604 350 964
Cash from Investing Activity
Fixed assets purchased -104 -392 -745
Fixed assets sold 52 24 3
Investments purchased -135 0 0
Investment sold 0 166 0
Other investing items 29 7 6
Net cash inflow from investing activities -158 -195 -736
Cash from Financing Activity
Repayment of borrowings -338 -40 -107
Intrest paid fin -105 -86 -82
Other financing items -32 -33 -34
Net Cash Flow -475 -159 -223

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Flair Writing Industries Limited 943 118 11.20 27.1 304 3,204
Linc Limited 487 37 25.15 26.9 698 1,038
Kokuyo Camlin Limited 775 24 2.44 36.1 144 1,449
Cello World Limited 1,797 285 13.43 62.6 785 16,660
* All the data is as per FY23.

Recommendation on Flair Writing Industries Limited IPO:

Review and Recommendation of Flair Writing Pens IPO By IZ team is 5/10 1. Flair Writing, established in 1976, has become one of the top three players in India's pen industry. As of FY23, the company reported a revenue of INR 950 crores. 2. The company manufactures various types of pens, including Flair pens, Hauser pens, and Pierre Cardin pens. Their product range is categorized into three price segments: INR 5-15 for the Mass Segment, INR 15-100 for the Mid-premium Segment, and INR 100-3000 for the Premium Segment. 3. Flair Writing holds a 9% market share and distributes its products through 7,700 distributors/dealers and approximately 315,000 wholesalers/retailers as of March 31, 2023. 4. The company has seen significant growth in sales, selling 62 crore pens in FY21 and increasing to 130 crore pens in FY23. 5. With the increasing shift towards digital mediums reducing the usage of pens, Flair Writing is diversifying into houseware products. Their range includes casseroles, bottles, storage containers, serving solutions, cleaning solutions, and paper bins. This diversification is managed by one of their subsidiaries, FWEPL, for which they are raising working capital. 6. In FY23, 75% of the company's sales came from the domestic market, while 25% was generated from exports. 7. Flair Writing Industries Limited has demonstrated impressive financial growth over the last five years. Their revenue increased from INR 504 Crores in FY18 to INR 950 Crores in FY23, showing a strong upward trend in sales. 8. Regarding valuation, the company's Earnings Per Share (EPS) for FY23 was 10.51, with the Initial Public Offering (IPO) price set at INR 304. This places the company at a Price to Earnings (P/E) ratio of 28x, which is considered reasonable within the industry standards.

Lead Manager of Flair Writing Industries Limited IPO:

  1. Axis Capital Limited
  2. Nuvama Wealth Management Limited

Registrar of Flair Writing Industries Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Flair Writing Industries Limited 63 B/C, Government Industrial Estate Charkop, Kandivali West Mumbai 400 067 Phone: +91 22 4203 0405 Email: investors@flairpens.com Website: https://flairworld.in/

Discussion on Flair Writing Industries Limited IPO:

4 Comments

    1. Mass Segment (₹5 – ₹15): Targeting the most price-sensitive customers, likely including students and individuals looking for affordable and functional writing instruments. This segment prioritizes cost-effectiveness and is often characterized by high-volume sales.

    2. Mid-premium Segment (₹16 – ₹100): Designed for consumers who are willing to pay a bit more for enhanced quality or additional features. This segment might include professionals, students seeking better performance, and offices that require reliable writing tools for daily operations.

    3. Premium Segment (Above ₹100): Catering to the luxury market or those who see writing instruments as more than just tools but as a statement or a collectible. This could include high-end pens used for gifts, by enthusiasts, or by professionals who prefer a premium writing experience.

    Reply

    Cash Flow From Operations and Capex

    In the last 3 years Flair Writing Industries has generated a Free Cash flow of INR 65 Cr and done capex of INR 114 Cr.

    Reply

    1. Flair Writing Industries Limited has exhibited commendable financial growth over the past five years. Between FY18 and FY23, the company’s revenue surged from INR 504 Crores to an impressive INR 950 Crores, indicating a strong upward trajectory in sales performance.

    2. During this period, Flair Writing Industries managed to maintain stable EBITDA margins, consistently ranging between 17-18%. This suggests efficient operational management and a reliable profitability ratio.

    3. The Profit After Tax (PAT) also reflected significant growth, climbing from INR 53 Crores in FY18 to INR 117 Crores in FY23, more than doubling over the five-year span.

    4. Regarding its market valuation, the Earnings Per Share (EPS) for FY23 stood at 10.51, with an Initial Public Offering (IPO) price set at INR 304. This positions the company at a Price to Earnings (P/E) ratio of 28x, which can be considered reasonable within the industry’s pricing standards.

    Reply

    1. The company is involved in the business of Pens.

    2. However, they have recently forayed into manufacturing a wide range of houseware products including casseroles, bottles, storage containers, serving solutions, cleaning solutions and basket and paper bins, through one of our Subsidiaries, FWEPL.

    3. They intend to utilize a portion of the proceeds from the Offer for funding capital expenditure of FWEPL

    4. They intend to leverage the strength of the “Flair” brand and the manufacturing and distribution capabilities to expand and optimize the business of houseware products and steel bottles, which is expected to be a key area of the growth going forward.

    5. They have recently commenced manufacturing steel bottles through one of the Subsidiaries, FCIPL, in March 2023.

    Reply

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