Issue Details

• The offer includes a fresh issue of equity shares aggregating up to Rs 400 crore and an offer for sale up to 1,75,82,000 equity shares.
• Up to 1,75,000 equity shares are reserved for eligible employees at a discount of Rs 53 per share to the final IPO price.
• The company has raised Rs 401 crore from 25 anchor investors on Thursday. The IPO opens for retail investors on Friday and will close on 9 April.
• The proceeds of the issue will go towards debt repayment and working capital requirements.

Business background

Polycab India is in the business of manufacturing and selling wires, cables and fast moving electrical goods (FMEG).

In 2009, the company diversified into the engineering, procurement and construction business. In 2014, it entered the FMEG segment where it started offering products such as electric fans, LED lighting, switches and switchgears, solar products and conduits and accessories.

Its post-issue implied market capitalization will be around Rs 8,000 crore if the IPO sails through successfully.

Should you subscribe?

Considering the attractive valuation, strong financial and distribution network, brokerage houses are positive on the Polycab India and recommend subscribing to the IPO.

According to brokerage Sharekhan, "at the upper price band, Polycab is valued at a P/E of 21.6x its FY2018 earnings which is much lower than the industry average but almost at par with close peers like KEI Industries and Finolex cables. However its return on equity is tad lower than industry players barring Finolex cables."

"Expansion into new products (like green products), enhancing market share by targeting growth segments (mining, renewables etc), ramp-up in FMEG business, focus on backward integration (Ryker Plant - for copper wire rods) and good brand identity could help maintain Polycab's potential business prospects. Given the brand position, financials and business prospects, we suggest investors can subscribe to the issue," said Centrum Wealth Research.