Shares of Polycab India Ltd. closed 3.2 percent over its opening price of Rs 633 apiece on the National Stock Exchange Ltd. The stock debuted 20 percent higher, further rising to hit the day's high of Rs 667.80.
The country's largest manufacturer of electric wires and cables' Rs 1,345-crore initial public offering was subscribed 52 times, driven by a strong subscription from institutional and non-institutional bidders.
The IPO garnered most interest since HDFC AMC IPO which received 82.99 times bids in July last year. PhillipCapital has initiated coverage on the stock with a target price of Rs 718. Polycab India's issue price was Rs 538. The brokerage sees 34 percent upside in the stock.
The wire maker plans to use the proceeds from the IPO for debt repayment and working capital requirements.
It has a market share of close to 12 percent in the Indian electric wire and cable market, according to its red herring prospectus. It also manufactures electrical goods, including fans, LED lighting, switches and switchgears and solar products.
Polycab India has a “unique business model”, its Vice Chairman, joint Managing Director and group Chief Executive Officer R Ramakrishnan told BloombergQuint in an interaction. The company's dependence on its retail business, business to customer segment, business to business segment and exports is 80 percent, 35 percent, 15 to 20 percent and 5 to 6 percent respectively.
“With this kind of business footprint, we are well placed to be able to ensure good stakeholder value in the future,” he said.
Revenue of the Indian cable and wire industry grew at an annualised rate of 11.1 percent in the last five years, according to the red herring prospectus. This is the same growth rate at which Polycab's revenue improved in four years through March 2018. The overall market is expected to rise to 14.4 percent due to increased consumer spending and the government's initiatives in power and infrastructure.
Polycab has always believed in investing in a downturn. We are a permanent bull in terms of India's Gross Domestic Product story.R Ramakrishnan, VC, Joint MD, Group CEO, Polycab India
Watch the full interaction here:
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