KARACHI: Fast Cables Ltd, which manufactures electrical cables and conductors, is set to go public by selling one-quarter of its post-listing stake for at least Rs3 billion.

The Lahore-based cable maker will issue 83.5 million shares or 25 per cent of its total post–initial public offering (IPO) shareholding at a floor price of Rs36 a share through book building.

Institutional investors and high net-worth individuals will submit bids that can go up to Rs50.40 or 40pc above the floor price.

Therefore, proceeds of the IPO can range from a minimum of Rs3bn to a maximum of Rs4.2bn depending on the level of investors’ interest received at the book-building stage.

Three-quarters of the total issue size will be allotted to successful bidders participating in the first leg of the IPO while 25pc of the issue will subsequently be offered to retail investors at the strike price, which is the optimum rate determined on the basis of the book-building process.

The firm will utilise IPO proceeds for the acquisition of new land, construction of a state-of-the-art building, installation of new plant and machinery and repayment of debt associated with the machinery and building components. It’ll use any excess amount raised above the floor price to meet working capital requirements.

In terms of the price-to-earnings (P/E) ratio, the floor price and the income per share for trailing 12 months result in a multiple of 7.81. The P/E ratio or multiple measures a company’s share value relative to its per-share earnings.

The multiple of Fast Cables is slightly above the P/E ratio of 6.23 for Pakistan Cables Ltd, which is the only listed peer of the firm interested in going public.

Net profit of Fast Cables in 2021-22 amounted to over Rs1bn, up 95pc from a year ago. Its top line clocked in at Rs22.9bn, up 61.6pc on an annual basis.

Major products of Fast Cables include building wires, industrial wires, telecommunication wires, core cables and aluminium conductors etc.

The company operates on business-to-customer (B2C), business-to-business (B2B) and business-to-government (B2G) models. Its products are distributed through dealerships under the B2C model while B2B and B2G models involve direct sales to big clients and government-owned entities like Wapda.

In terms of the share in total sales, its top-three customers in the last fiscal year were K-Electric Ltd (7pc), Islamabad Electric Supply Company Ltd (4.7pc) and Multan Electric Supply Company Ltd (3.9pc).

The Pakistan Stock Exchange has placed the draft prospectus of the company on its website to seek public comments on the upcoming issue before August 17.

Published in Dawn, August 15th, 2023