Vraj Iron and Steel IPO: The initial public offering (IPO) of Vraj Iron and Steel Ltd is set to close today, Friday, having a blockbuster subscription rate. Till 4:43 pm on the final day of bidding on Friday, the IPO received a 126.05 times subscription garnering 72,88,88,400 shares as against 57,82,609 shares on offer, according to the latest NSE data.
The quota for non-institutional investors received 221.49 times subscription while Retail Individual Investors (RIIs) portion got subscribed 57.75 times. The category for Qualified Institutional Buyers (QIBs) fetched 173.99 times subscription.
The Rs 171-crore IPO, which was opened for public subscription on Wednesday, was fully subscribed within the first hour of its opening.
The Vraj Iron and Steel IPO allotment will likely be finalised on July 1, while its listing will take place on both BSE and NSE on July 3.
Its price band was fixed at Rs 195-Rs 207 per share.
Investors need to apply for a minimum of 72 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,904 (72 (lot size) x Rs 207 (upper price band)).
Vraj Iron and Steel IPO GMP Today
According to market observers, unlisted shares of Vraj Iron and Steel Ltd are trading Rs 90 higher in the grey market as compared with its issue price. The Rs 90 grey market premium or GMP means the grey market is expecting a 43.48 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Vraj Iron and Steel IPO: Should You Subscribe?
Giving ‘Subscribe for long term’ recommendation to the IPO, brokerage firm Mastertrust in a note said, “The company is in the process of increasing their capacity from 2,31,000 TPA to 5,00,100 TPA for manufacturing and 5 MW to 20 MW for their captive power plant. The expansions for sponge iron and captive power plant are expected to be ready by fy25 whereas the expansion for MS billets will be ready by early next fY26. We advise to Subscribe to this IPO for long term.”
Another brokerage Swastika in its note also said, “The IPO’s P/E valuation of 9.48x appears reasonable. Considering the potential for long-term growth and the possibility of modest listing gains, we recommend a subscribe rating for this IPO.”
Vraj Iron and Steel IPO: Strengths and Risks
Strengths
- Integrated and well-established manufacturing setup
- Manufacturing plants are strategically located, supported by robust architecture, leading to cost efficiencies and a stable supply chain
- Diversified product mix with strong focus on value-added products
- Experienced Promoter, Board and management team
- Consistent track record of growth and financial performance
- Promoter-led company with experienced professional and senior management team
Risks
- Both of the existing manufacturing facilities are concentrated in a single region i.e. Raipur and Bilaspur, Chhattisgarh.
- The company’s complete revenue is from sale of their steel products such as TMT Bars, MS Billets, Sponge Iron & others related items.
- It has had experienced negative cash flows from operating, investing and financing in the recent past.
- Capital expenditure to the tune of Rs 1,295 million required towards the expansion project at Bilaspur would be funded out of the net proceeds of the IPO.
- A majority of the Directors of the Company do not have prior experience of being a director of a public listed company.
Vraj Iron and Steel IPO: More Details
The Rs 171-crore IPO is entirely a fresh issue of equity shares with no offer-for-sale component. Vraj Iron and Steel has already raised over Rs 51 crore from anchor investors. The proceeds will be used for expansion projects at the Bilaspur facility and general corporate purposes.
Raipur-based Vraj Iron and Steel manufactures sponge iron, MS (Mid Steel) billets, and TMT (Thermo Mechanical Treatment) bars, operating through two plants in Raipur and Bilaspur, Chhattisgarh. Post-expansion, the company’s installed capacity will increase from 2,31,600 TPA to 500,100 TPA, and captive power capacity from 5 MW to 20 MW.
Aryaman Financial Services is the sole book-running lead manager, while Bigshare Services is the registrar for the IPO. The equity shares will be listed on both NSE and BSE.
