Plaza Wires Limited IPO

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The business model of Plaza Wires is focused on manufacturing and selling wires, LT aluminium cables, and fast-moving electrical goods (FMEG) under the brand “PLAZA CABLES” and home brands like “Action Wires” and “PCG.” Key points of their business model include:

1. Certifications: The company is ISO 9001:2015 and 14001:2015 certified, emphasizing their commitment to quality and environmental standards.

2. Product Range: They offer a wide range of products, including wires, cables, electric fans, water heaters, switches, switchgears, PVC insulated electrical tape, PVC conduit pipe, and accessories.

3. Market Position: According to the Resurgent India Research Report, the company is recognized as one of the growing manufacturers in the wires and cables industry in northern India. They provide an extensive range of wires and cables.

4. Product Categories: Their key products in the wires and cables segment include building wires (house wires), single and multicore round flexible industrial cables, and industrial cables for submersible pumps and motors up to 1.1kv grade.

5. Third-Party Manufacturing: For certain products like LT power control cables, TV dish antenna co-axial cables, telephone and switchboard industrial cables, computer and LAN networking cables, CCTV cables, and solar cables, they collaborate with third-party manufacturers based on specific criteria such as quality standards and reputation.

6. Quality Standards: Their products are compliant with various quality standards, including Bureau of Indian Standards (BIS) and QCL Certification.

7. FMEG Expansion: In recent years, the company has expanded into the FMEG sector, including electric fans and water heaters, and has established service centers for after-sales support.

8. Distribution Channels: They sell their products through various distribution channels, including dealers, distributors, and government tenders for supply to government projects. They also engage in direct sales to infrastructure projects.

9. Geographic Expansion: The company has expanded its product portfolio by launching miniature circuit breakers and distribution boards in different regions of India.

Competitive Strengths

i. Product portfolio focused on various customer segments and markets
ii. Distribution network
iii. Management and dedicated employee base

Objects of the Plaza Wires Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: i. Funding the capital expenditure towards setting up a new manufacturing unit for house wires, fire-resistant wires & cables, aluminum cables, and solar cables to expand the product portfolio. ii. Funding the working capital requirements of the company. iii. General corporate purposes.

Plaza Wires Limited IPO Details:

Open Date: Sep 29 2023
Close Date: Oct 05 2023
Total Shares: 13,200,158
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 71.28 Cr.
Lot Size: 277 Shares
Issue Price: ₹ 51 - 54 Per Equity Share
Listing At: NSE,BSE
Listing Date: Oct 13 2023

Promoters And Management:

Mr. Sanjay Gupta, is the Managing Director and one of the Promoters of the Company. He has been on the Board of Directors of the Company since March 12, 2008 and was appointed as the Managing Director and Chairman of the Company since March 10, 2022.He holds a Bachelor of Commerce from the University of Delhi. He possesses approximately 26 years of experience in electrical industry. He has been instrumental in planning and formulating the overall business and commercial strategy and developing business relations of the Company. He oversees the entire planning of the manufacturing, sales and finance departments of the Company. Mrs. Sonia Gupta, is a Whole-time Director one of the Promoters of the Company. She has been on the Board of Director of the Company since March 21, 2008. She holds a degree in Bachelor of Arts (Honours) from University of Delhi. She has approximately 26 years of work experience in the electrical industry. She has been instrumental in planning and formulating the overall business and commercial strategy and managing the financial planning of the Company Mr. Aditya Gupta, is a Whole-time Director of the Company. He has been associated with the Company since March 31, 2019. He holds a degree in Bachelor of Arts from Wesleyan University. He has approximately 7 (seven) years of work experience in the electrical and solar industry. He manages the sales planning of the Company along with planning and implementing the business strategies.

Financials of Plaza Wires Limited IPO:

A. Balance Sheet
Particular (In Million) Mar-21 Mar-22 Mar-23
Equity Share Capital 38.19 305.52 305.52
Reserves 357 150 225
Borrowings 433 401 397
Trade Payables 103 109 105
Other Liabilities 62 76 89
Total Liabilities 992 1041 1121
Net Block 196 228 228
Capital Work in Progress 0 0 28
Other Assets 13 15 11
Total NC Assets 209 243 267
Receivables 466 443 521
Inventory 286 309 299
Cash & Bank 0.1 0.1 3
Other Assets 32 46 30
Face value 10 10 10
B. Profit & Loss Statement
Particular (In Million) Mar-21 Mar-22 Mar-23
Sales 1,454 1,768 1,825
Raw Material Cost 1,131 1,386 1,346
Change in Inventory -4 -9 49
Employee Cost 80 109 116
Other Expenses 139 149 157
Other Income 2 2 1
Depreciation 12 13 13
EBITDA 111 134 158
EBITDA Margin 7.62% 7.55% 8.66%
Interest 37 34 42
Profit before tax 61 86 103
Tax 19 27 28
Net profit 42 60 75
NPM (%) 2.91% 3.37% 4.11%
C. Cash Flow Statement
Particular (In Million) Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 113 137 160
Receivable -170 21 -81
Inventory 6 -23 10
Payable 10 6 -4
Other WC Items 34 -16 24
Working Capital Changes -121 -11 -51
Direct Taxes 17 15 23
Net Cash Inflow from Operating Activity -24 110 86
Cash from Investing Activity
Fixed assets purchased -13 -44 -12
Fixed assets sold 3 0 0
Other investing items 2 1 -27
Net cash inflow from investing activities -8 -42 -39
Cash from Financing Activity
Proceeds from borrowings 71 0 0
Repayment of borrowings 0 -32 -4
Intrest paid fin -37 -34 -42
Other financing items -1.9 -1.9 -0.5
Net Cash Flow 0.01 -0.02 -0.01

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Plaza Wires Limited 182 8 1.71 31.5 54 236
Cords Cable Industries Ltd 526 7 5.58 17.9 101 131
Ultracab (India) Ltd 107 6 0.61 26.4 16 153
V-Marc India Limited 245 10 4.59 21.7 99.4 226
Dynamic Cables Limited 669 31 14.09 28.6 457 1,006
Paramount Communications Limited 794 48 2.46 26 64.5 1,440
* All the data is as per FY23.

Recommendation on Plaza Wires Limited IPO:

Review and Recommendation of Plaza Wires by IZ team is 5/10

A) Business Model Overview Plaza Wires operates under the umbrella of multiple brands like "PLAZA CABLES," "Action Wires," and "PCG." The company is certified under ISO 9001:2015 and 14001:2015, signaling a commitment to quality and environmental sustainability. Their diversified product range includes wires, cables, FMEG (Fast Moving Electrical Goods), and more.

B) Financial Snapshot

Plaza Wires Limited exhibits a robust financial position, characterized by consistent revenue growth, improving operational efficiency as indicated by rising EBITDA, and an upward trajectory in net profits. The company's balance sheet is resilient, marked by a declining Debt-to-Equity ratio, which suggests reduced financial risk. The current ratio remains strong, highlighting excellent liquidity. Moreover, Plaza Wires has turned its operational cash flow positive in recent years, further strengthening its financial health. Return metrics like ROE at 13.5% is impressive, indicating an efficient allocation of equity and capital. Overall, the company appears to be financially sound and operationally efficient, based on the available data.

C) Objectives of the IPO

1. Capital Expenditure: To fund a new manufacturing unit. 2. Working Capital: To meet the company's working capital requirements. 3. General Corporate Purposes: Miscellaneous needs.

D) Comparison with Peers and Valuation

When compared to peers, Plaza Wires has a higher P/E ratio of 31.5. This signal that the stock is slightly overvalued. The Mcap is ~236 Cr.

E) Prospects and Challenges in the Wire and Cable Sector in India

1. Growth Prospects a) Infrastructure Boom: With India eyeing to become a $5 trillion economy, the demand for electrical infrastructure will surge, positively impacting the wire and cable industry. b) Green Energy: The push towards renewable energy sources like solar and wind energy will necessitate a robust cable and wire infrastructure. c) Smart Cities: The Smart Cities Mission in India will require advanced electrical systems, thereby increasing demand. d) Automotive Sector: The rise in electric vehicles will also lead to increased demand for specialized cables and wires. 2. Challenges 1. Raw Material Price Fluctuation: The industry is susceptible to fluctuations in the prices of raw materials like copper and aluminum. 2. Unorganized Market: A significant portion of the market is unorganized, which impacts the pricing strategy and profitability of organized players. 3. Regulatory Hurdles: Compliance with various quality standards can be challenging and time-consuming. 4. Technology Upgradation: Continuous investment in technology to meet evolving standards is required, which can strain finances.

F) Conclusion and Recommendations

Plaza Wires appears to be a steadily growing company with a focus on product diversification and quality. However, the slightly higher P/E ratio and the company's borrowings could be points of concern. Given the positive growth prospects in the wire and cable sector in India, an investment in Plaza Wires may offer reasonable returns, but potential investors should exercise caution and delve deeper into the company's financials and future plans.

Lead Manager of Plaza Wires Limited IPO:

  1. Pantomath Capital Advisors Private Limited

Registrar of Plaza Wires Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Plaza Wires Limited A-74 Okhla Industrial Area, Phase-2 New Delhi South Delhi - 110020 Phone: 011-66369696 Email: Website

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