Flair Writing Industries Limited is among the top three players in the overall writing instruments industry with a revenue of Rs 9,155.5 million in Financial Year 2023 and occupy a market share of approximately 9% in the overall writing and creative instruments industry in Bharat, as of March 31, 2023, according to CRISIL. They are also among the top two organized players which have seen faster growth in revenue as compared to overall writing and creative instrument industry growth rate, i.e., while the industry grew at a compounded annual growth rate of 5.5% between FinancialYear 2017 and 2023, they grew at a compounded annual growth rate of approximately 14% during the same period. The flagship brand 'Flair' has enjoyed a market presence of over 45 years. They have an extensive range of products across various price points and cater to a broad range of consumers, including students, professionals and offices. They manufacture and distribute writing instruments including pens, stationery products and calculators. Leveraging on the manufacturing capabilities, and the existing customer base in the writing and creative instruments business, they have also diversified into manufacturing houseware products and steel bottles. During the three-month period ended June 30, 2023, company sold 344.32 million units of pens, of which 279.21 million units or 81.09% was sold domestically, and 65.11 million units or 18.91% was exported globally, and in Financial Year 2023, they sold 1,303.60 million units of pens, of which 975.30 million units or 74.82% was sold domestically ,and 328.30 million units or 25.18% was exported globally. Compared has approximately 7,700 distributors/dealers and approximately 3,15,000 wholesalers/retailers, as of March 31, 2023. They occupied a market share of 7.1% in the export of writing and creative instruments industry, in Financial Year 2023, according to CRISIL. Company manufactures and distributes several brands in Bharat, they are able to partner with various international brands in the writing instruments industry. The products are sold under the 'Flair' brand, the principal brands 'Hauser' and 'PierreCardin' and they have recently introduced 'ZOOX' in Bharat. The brands 'Flair' and 'Hauser' offer mass-market and premium pen and stationery products, the brand 'ZOOX' focusses on mid-premium and premium writing instruments, and the 'Pierre Cardin' brand offers premium pen and stationery products. They also contract manufacture writing instruments as an OEM for export and for sale in Bharat, which contributed 16.87%, 19.94%, 33.37% and 38.67% to the revenue from operations in the three-month period ended June 30, 2023 and the Financial Years 2023, 2022 and 2021, respectively. They also provide customized corporate gifting products to the corporate customers. Company has 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 the Subsidiaries, FWEPL. They intend to utilize a portion of the proceeds from the Offer for funding capital expenditure of FWEPL for purchase of machinery and moulds to expand its manufacturing capacity for writing instruments. They have recently commenced manufacturing steel bottles through one of the Subsidiaries, FCIPL, in March 2023. One manufacturing line has been commissioned in the month of March 2023, according to the Chartered Engineer, pursuant to the certificate dated October 26, 2023 and they intend on commissioning two more manufacturing lines during the third quarter of Financial Year 2024 at the manufacturing plant in Valsad, Gujarat. They manufacture pens and other products from 11 manufacturing plants located in Valsad, Gujarat; in Naigaon (near Mumbai), Maharashtra; in Daman, Union Territory of Dadra and Nagar Haveli and Daman and Diu; and in Dehradun, Uttarakhand. The capacity utilisation is 77.59%, 72.82%, 58.41% and 33.62% for Q1 FY23, FY23, FY22 and FY21. As per financial performance, Flair Writing Industries Limited has posted total income / net profits of Rs 310.87 Cr / Rs 0.99 Cr (FY21), Rs 587.64 Cr / Rs 55.15 (FY22), Rs 954.29 Cr / Rs 118.10 Cr (FY23) and Rs 248.50 Cr / Rs 32.14 Cr (upto Q1 FY24). So as per previous financials data, company has shown above average growth and company is able to generate sales and profits above pre-covid levels. Company has an average EPS of Rs 8.32 and average RoNW of 31.17% for last three fiscals. Issue is priced at a P/BV of 6.04 as per NAV of 50.34 as on 30.06.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 58.10, 27.13 and 24.92 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, two lead managers are associated with this IPO, and have handled around 59 IPOs in last three fiscals. Nuvama Wealth Management Limited : This is 17th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. (As on 17.11.2023) Axis Capital Limited : This is 45th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above or at par of issue price. (As on 17.11.2023) As per financials, Flair Writing Industries Limited has above average growth, RoNW is 31.17% and P/E is respectively 58.10, 27.13 and 24.92 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in business of writing instruments and stationery items with diversification in housewares, steel bottles and appliances. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
✍️ Post a Comment