Despite stuck in lower circuit, Flair Writing posts 49% gain on listing day

As expected, shares of Flair Writing Industries made a big bang debut on the exchanges on Friday. Against the IPO price of ₹304, the stock opened at 503, a premium of 65.40 per cent, on the BSE. The stock rose further to ₹514 but could not sustain the gains and closed at ₹452.70 — still a gain of 49 per cent over the IPO price. On the NSE also, it closed at the lower circuit at ₹450.10, after opening firm at ₹501.

The issue was one of the star attractions last week and was subscribed 46.6 times. The company had raised ₹593 crore — a fresh issue worth ₹292 crore and an offer-for-sale (OFS) of ₹301 crore worth shares by the Rathod family.

The IPO was subscribed 13 times in the retail category and 33.37 times in Non-Institutional Investors’ portion. QIB portion was subscribed whopping 115 times.

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Ahead of the issue, the Mumbai-based writing instruments manufacturing company mobilised ₹177.9 crore from anchor investors.

Flair will utilise the proceeds to set up a new manufacturing facility for writing instruments in Valsad for ₹55.99 crore. Further, it will spend ₹86.75 crore on capital expenditure and ₹77 crore on working capital requirements. The company will repay the debt amounting to ₹43 crore from the fresh issue proceeds, and the remaining funds will be used for general corporate purposes.

Analyst’s call

Rajan Shinde, Research Analyst, Mehta Equities, said the healthy listing is justified on the back of high growth seen in the writing instruments and stationery segment, diversification into housewares, steel bottles and appliances and ongoing expansion plans to tap the future growth.

Also read: Should your IPO investment be based only on grey market premium?

While long-term investors can Hold considering healthy growth prospects, conservative short-term IPO investors can book profits, he said.

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