Subscribe- Long Term Vraj Iron and Steel Ltd; Anand Rathi

Subscribe- Long Term Vraj Iron and Steel Ltd; Anand Rathi

Anand Rathi, IPO report on Vraj Iron and Steel Ltd

Vraj Iron and Steel is engaged in the manufacturing of Sponge Iron, M.S. Billets, and TMT bars under the brand Vraj. They currently operate through two manufacturing plants located at Raipur and Bilaspur in Chhattisgarh, spread across 52.93 acres. As of December 31, 2023, the aggregate installed capacity of their manufacturing plants was 2,31,600 tons per annum (“TPA”) (comprising intermediate and final products). Their manufacturing plant at Raipur also includes a captive power plant with an aggregate installed capacity of 5 MW, as of December 31, 2023. They are in the process of increasing the capacities of their existing manufacturing plants and captive power plant, which is expected to increase their aggregate installed capacity (comprising intermediate and final products) from 2,31,600 TPA to 5,00,100 TPA and the captive power plant's aggregate installed capacity from 5 MW to 20 MW. The proposed expansion of Sponge Iron and Captive Power Plant is expected to become operational in Q4 of FY 2024-25, whereas the MS Billets expansion is expected to become operational in Q1 of FY 2025-26.

Valuation and Outlook

At the upper price band company is valuing at P/E of 12.65x, EV/EBITDA 9.09x with a market cap of ₹ 6,827 million post issue of equity shares and return on net worth of 38.82%. We believe that the IPO is fairly priced and recommend a “Subscribe- Long Term” rating to the IPO.

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27062024 -Vraj Iron and Steel -IPO - anand