Flair Writing, a 50-year-old pen company, saw its IPO price jump 65% after listing. This begs the question: why are investors so excited about a company that makes pens and pencils?
With the rise of digital devices like tablets and smartphones, many people believe that pen and paper are becoming obsolete. However, research suggests that writing by hand can improve memory, reasoning, and cognitive skills.
Despite the digital revolution, the pen and pencil industry in India is still thriving, with a market size of ₹7,000 crores. This presents a significant opportunity for companies like Flair.
Flair Writing boasts the largest distribution network of any pen and pencil company in India, with over 320,000 sellers across the country. This gives them a significant advantage over their competitors.
Flair Writing enjoys significantly higher profit margins than its peers, with a PAT margin of 12.5% compared to Linc's 7.7%. This allows them to reinvest in growth and expansion.
Flair Writing has embarked on a diversification strategy, launching new product lines with international brands like Houser and Pierre Cardin. This move gives them access to higher-margin segments of the market.
Flair Writing has begun experimenting with houseware products like steel bottles and storage containers. This segment holds promising potential for future growth.
Flair's IPO success has driven up its share price. While the current P/E ratio of 38 times may seem high, it is still lower than some of its competitors. However, there are some risks to consider, such as inventory management and diversification success.
Flair Writing has a strong track record, a dominant market presence, and a promising diversification plan. While some challenges remain, the company's future looks bright.
Only time will tell if Flair's IPO success is a sign of things to come. Keep your eyes peeled for further developments from this exciting company.