Vraj Iron and Steel IPO listing

Vraj Iron and Steel Debuts with a Bang: Lists at 33% Premium

Positive Analyst Outlook

Analysts have a positive view on Vraj Iron and Steel and advise participants who have been allotted shares to ‘Hold’ them from a medium to long-term perspective.

Impressive Market Debut

Vraj Iron and Steel made a healthy stock market debut on Wednesday, July 3, with its shares listing at ₹240 on both exchanges, a 33% premium over the issue price of ₹207. Post listing, the stock hit a high of ₹248 in intra-day trade.

Company Background

Vraj Iron and Steel, a leading manufacturer of sponge iron, M.S. billets, and TMT bars, debuted strongly on the stock exchanges on July 3, 2024, listing at a significant premium to its issue price.

IPO Details and Subscription

The company’s ₹171 crore IPO, open for subscription from June 26 to June 28, 2024, received an overwhelming response from investors. The issue was subscribed a staggering 119.04 times, with non-institutional investors leading the charge with a subscription of 208.81 times their allotted portion.

Listing Gains and Grey Market Premium

Vraj Iron and Steel’s shares listed at ₹240 on both the NSE and BSE, a premium of 33% over its issue price of ₹207 per share. The listing gains aligned with the grey market premium (GMP), where the shares were trading at a premium of over ₹67, indicating a 32.37% premium above the issue price.

Analyst Insights

Parth Shah of StoxBox expected the shares to list at a premium of about 35% to the issue price. “Considering India’s relatively low finished steel consumption compared to the global average and the promising economic outlook of the Indian economy, we anticipate robust performance from the steel industry in the future.” Vraj Iron and Steel IPO listing

With the company planning to expand its existing manufacturing and power plant capacity, Shah believes that domestic growth prospects align with the company’s plans, further aiding its operational efficiency. The company boasts a diversified product mix, helping de-risk its revenue streams. Vraj Iron and Steel IPO listing

Shah advises participants who have been allotted shares to ‘Hold’ them from a medium to long-term perspective.

Amit Goel of Pace 360 had expected a listing at around ₹275-285 per share, resulting in a listing gain of around 33%. He stated that the issue appears reasonably priced based on the FY24 annualized earnings. Vraj Iron and Steel IPO listing

Goel added that the company has shown positive results thus far and is optimistic about continuing this trend post-expansion. Vraj Iron and Steel is rapidly expanding to meet the growing demand for its products, with all expansion plans expected to be operational starting in the first quarter of FY26.

Robust Subscription

The issue was overall subscribed 119.04 times. The category for qualified institutional bidders (QIBs) was subscribed 163.90 times. The quota for non-institutional investors was booked 208.81 times, while the portions set aside for retail investors saw bidding for 54.93 times.

Anchor Investors

Vraj Iron and Steel collected a little over ₹51 crore from anchor investors, including Volrado Venture Partners Fund IV, Capri Global Housing Finance, Ashika Global Securities, Rajasthan Global Securities, Leading Light Fund VCC – The Triumph Fund, and Astorne Capital VCC-Arven.

Public Issue Details

The company sold its shares in the range of ₹195 to ₹207 per share, with 72 equity shares in a lot. The public issue included only a fresh issue with no offer-for-sale component. The proceeds will be used for the expansion project at the Bilaspur facility and general corporate purposes. Vraj Iron and Steel IPO listing

Company Operations and Future Plans

Vraj Iron and Steel operates through two manufacturing plants at Raipur and Bilaspur in Chhattisgarh. Post-expansion, the company expects to increase its aggregate installed capacity from 231,600 tonnes per annum (TPA) to 500,100 TPA and captive power plants’ aggregate installed capacity from 5 MW to 20 MW. Vraj Iron and Steel IPO listing

On the earnings front, the company posted an 88% year-on-year growth in net profit at ₹54 crore for the year ended March FY23 on healthy operating numbers. Its revenue from operations for the year rose by 24.5% to ₹515.7 crore compared to the previous year.

Conclusion

Vraj Iron and Steel’s strong debut on the stock exchanges, with a listing at a 33% premium over its issue price, underscores the market’s confidence in the company’s growth prospects. The overwhelming subscription and participation from anchor investors further validate the appeal of the company’s business model and expansion plans. As Vraj Iron and Steel embarks on its journey as a listed entity, investors will be closely watching the company’s performance and ability to capitalize on the opportunities in the steel sector. Vraj Iron and Steel IPO listing