Vraj Iron and Steel IPO: Check GMP, subscription status, brokerage reviews and more
Vraj Iron and Steel IPO: Check GMP, subscription status, brokerage reviews and more
The initial public offering (IPO) of Vraj Iron and Steel saw a strong response from the investors during the second day of the bidding process. After being fully subscribed on the first day itself, the issue continued to attract investors from retail and non-institutional investors.
The Raipur-based Vraj Iron and Steel is selling its shares in the price band of Rs 195-207 apiece. Investors can apply for a minimum of 72 shares and its multiples thereafter. It is looking to raise Rs 171 crore via IPO, which entirely includes a fresh share sale of 82,60,870 equity shares.
According to the data, the investors made bids for 3,42,69,192 equity shares, or 5.58 times, compared to the 61,38,462 equity shares offered for the subscription by 10.55 pm on Thursday, June 27. The three-day bidding for the issue will conclude on Friday, June 28.
The allocation for retail investors was subscribed 7.60 times, while the portion reserved for non-institutional investors saw a subscription of 4.83 times. However, the quota set aside for employees attracted bids for 7.62 times of their reservation, while qualified institutional bidders (QIBs) quota was booked only 14 per cent times as of the same time.
Incorporated in June 2004, Vraj Iron and Steel manufactures Sponge Iron, M.S. Billets, and TMT bars under the brand Vraj. The company's product portfolio comprises offerings such as Sponge Irons, TMT Bars, MS Billets, and by-products Dolochar, Pellets, and Pig Iron, which cater to a mix of industrial customers and end-users.
The grey market premium of Vraj Iron and Steel has remained firmed after the first day of the bidding. Last heard, the company was commanding a premium of Rs 85 in the unofficial market, suggesting a listing pop of about 41 per cent for the investors. However, the premium in the grey market stood around Rs 75 levels, before the bidding opened for the issue.
Vraj Iron and Steel raised Rs 51.29 crore via anchor book and allocated 24,78,259 equity shares at Rs 207 equity share. For the nine-months ended on December 31, 2023, the company reported a net profit of Rs 44.58 crore with a revenue of Rs 304.81 crore. The company's bottomline came in at Rs 54 crore with a revenue of Rs 517.42 crore for the financial year ending March 2023.
Vraj Iron and Steel has reserved 50 per cent of the net offer for the qualified institutional bidders (QIBs) and 15 per cent shares shall be allocated towards non-institutional investors (NIIs). Retail investors will have only 35 per cent of the allocation in the issue.
Aryaman Financial Services is the sole book running lead manager of the Vraj Iron and Steel IPO, while Bigshare Services is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with July 03, Wednesday as the tentative date of listing. Here's what a host of brokerage firms say about the IPO of Vraj Iron and Steel:
Anand Rathi Research
Rating: Subscribe for long-term
Vraj Iron and Steel is an integrated and well-established manufacturing setup with diversified product mix with strong focus on value added products and manufacturing plants are strategically located, supported by robust architecture, leading to cost efficiencies and a stable supply chain along with Experienced Promoters, Board and management team, said Anand Rathi.
"At the upper price band, the company is valuing at P/E of 12.65 times, EV/Ebitda 9.09 times with a market cap of Rs 682.7 crore post issue of equity shares and return on net worth of 38.82 per cent. We believe that the IPO is fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.
Swastika Investmart
Rating: Subscribe
Vraj Iron and Steel is a manufacturer of Spong Iron, MS Billets, and TMT bars. Its well-established and strategically located manufacturing facilities, coupled with a focus on value-added products and ongoing expansion plans, position the company for future growth. Vraj Iron and Steel boasts a record of consistent financial performance over the past three years, said Swastika.
However, some risks require consideration. Its manufacturing facilities are concentrated in a single region, and it lacks long-term customer contracts. The steel industry is highly competitive, and Vraj Iron and Steel is susceptible to supply disruptions and raw material price fluctuations. Despite the risks, the IPO valuation appears reasonable, it added with a 'subscribe' rating.
Arihant Capital Markets
Rating: Subscribe
Vraj Iron and Steel significant capacity expansion, nearly doubling its production capabilities from 231,600 TPA to 500,100 TPA, which is expected to be completed by Q1FY26, coupled with a shift towards higher-margin products like TMT bars, suggests strong future growth and improved profitability, said Arihant Capital Markets.
"The company is well-positioned in the steel industry, with strategically located integrated manufacturing facilities in Chhattisgarh, close to raw material sources. At the upper end of the price band, the issue is valued at an PE of 11.48 times based on FY24 EPS (post issue, annualized) of Rs 18.03. We recommend 'subscribe' to this issue," it said.
SMIFS
Rating: Subscribe
Vraj Iron and Steel is positioned to capitalize on the robust growth prospects of the steel industry, driven by rapid urbanization, infrastructure development, and government investments in key sectors. Vraj's strategy to reduce debt using proceeds from the IPO will strengthen its balance sheet, reduce interest expenses, and improve net profitability, said SMIFS in a IPO note.
"We recommend a subscribe to the issue as the planned capacity expansions and reduction of debt are expected to further drive profitability through economies of scale and improved cost efficiencies. We see it as a good long-term investment as the planned capacity expansions and reduction of debt are expected to drive future profitability," SMIFS said.
Marwadi Financial Services
Rating: Subscribe
Considering the FY-23 and FY24-Annualized EPS of Rs 16.37 and 18.02 on a post-issue basis, the company is going to list at a P/E of 12.64 times and 11.49 times, respectively, with a market cap of Rs 682.7 crore, whereas its peers are trading at a higher valuation, said Marwadi Financial Services.
"We assign a 'subscribe' rating to this IPO as the company has an integrated and well-established manufacturing setup along with consistent track record of growth and financial performance. It is available at a reasonable valuation as compared to its peers," it said.
Master Capital Services
Rating: Subscribe
Vraj Iron 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 plants are expected to be ready by FY25 whereas the expansion for MS billets will be ready by early FY26. We advise to Subscribe to this IPO for the long term, said Master Capital.
StoxBox
Rating: Subscribe
Vraj Iron is aiming to be a cost-efficient steel manufacturer and penetrate deeper into the regional market to capture a higher share of the existing market. The company is also planning to expand its existing manufacturing and power plant capacity which will further help in improving its financial performance and provide an edge over its competitors, said StoxBox, with a 'subscribe' tag.
GEPL Capital
Rating: Subscribe
Vraj Iron and Steel is leading manufacturing of Sponge Iron, MS Billets, and TMT bars, strategically located for operational efficiency and poised for growth through value-added products and ongoing expansions. It has demonstrated a strong financial performance over the three years, revenue, Ebitda and PAT grew by 21 per cent, 41 per cent and 69 per cent CAGR, respectively, said GEPL Capital.
"The expansion plans of the company at the Bilaspur plant aim to leverage existing infrastructure for improved margins and operational control across the value chain. Hence, we recommend an 'subscribe' rating for the issue," it said.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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