Flair Writing IPO pens a success story, subscribed 46.6x

• The QIB portion of the issue was subscribed 115 times the shares on offer.
  
• NII and retail portions were subscribed 33x and 13x respectively.
  

The ₹593 crore initial public offer (IPO) of Mumbai-based stationery maker Flair Writing was subscribed 46.6 times the shares on offer.

Qualified institutional buyer (QIB) portion of the issue was subscribed 115 times, with non-institutional and retail portions subscribed 33x and 13x respectively.

Flair Writing Industries has raised ₹177 crore from 23 anchor investors like SBI Consumption Opportunities Fund, HDFC Mutual Fund, Aditya Birla Sun Life and more.

Source: BSE

The company which manufactures and sells Flair brand of pens, also acquired rights to international brands like Hauser and Pierre Cardin’s writing instruments. Its products currently reach 3.15 lakh wholesalers and retailers.

The issue comprises fresh issue to the tune of ₹292 crore; and an offer for sale of ₹301 crore. The net proceeds from the fresh issue will be used to set-up a new manufacturing facility for writing instruments in Valsad, Gujarat. It will use the rest to fund capex; working capital requirements, loan payment and more.

The company’s revenues have been growing at a compounded annual growth rate (CAGR) of 22.85% from FY21 to FY23. “We have been consistently growing and outperforming the market. We are confident that we will be able to keep up with the growth rates seen historically,” said Rathod.

Its net profit almost doubled in FY23 as compared to the year before.

“In FY23, the company’s operating margin moved upward as EBITDA margins increased 300 basis points and stood at 19.47% versus 16.9% on a YoY basis,” said a report by Kunvarji Wealth Solutions which gave a ‘subscribe’ rating to the IPO.

Plant shutdowns, its inability to carry through its expansion plans, labour unrests, regulatory and other issues have been cited by the company as risk factors in its RHP.

It also adds that increased competition could have a material impact on its business. In FY23, the market share of organized players in the writing instrument space is around 78-80% with the rest being catered to by unorganized players, according to CRISIL.