As the final date of bidding for the initial public offering (IPO) of Vraj Iron and Steel comes to an end, investors have now shifted their focus on the allotment, which is likely to be finalised on Monday, July 1, 2024.
The ₹171 crore issue was open for subscription between June 26-28 at a price band in the range of ₹195-207.
According to chittorgarh.com, Vraj Iron and Steel Limited shares are available at a premium of ₹75 percent in the grey market today. This indicates an estimated listing price at ₹282, a 36.23 percent premium versus the issue price of ₹207. The GMP remained unchanged in the previous session on June 28, 2024, but was higher at ₹90 on June 27, 2024.
The IPO witnessed overwhelming investor demand. In the 3 days of bidding, it was subscribed 126.36 times. Investors bid for 73.07 crore shares as against 57.82 lakh on offer. The Non-Institutional Investors category was bid the most, 221.66 times followed by the Qualified Institutional Buyers (QIB) portion at 173.99 times. Meanwhile, the retail investor part witnessed 58.31 times subscription.
Vraj Iron and Steel IPO Details
The issue is entirely a fresh issue of 0.83 crore shares worth ₹171 crore. The company proposes to utilise the Net Proceeds for 1) Funding for Capital Expenditure towards the “Expansion Project” at Bilaspur Plant, 2) Repayment or prepayment of borrowings from HDFC Bank obtained by the company for the capital expenditure towards the “Expansion Project” at Bilaspur Plant, 3) Capital expenditure towards the “Expansion Project” at Bilaspur Plant, and 4) General Corporate Purposes.
The minimum lot size for an application is 72 Shares. The minimum amount of investment required by retail investors is ₹14,904.
The issue has reserved 35 percent of its offer size for NIIs, 20 percent for QIBs and 15 percent for retail investors. Meanwhile, 30 percent of the issue has been reserved for anchor investors.
Aryaman Financial Services Limited is the book running lead manager of the Vraj Iron and Steel IPO, while Bigshare Services Pvt Ltd is the registrar for the issue.
The book build issue is proposed for listing on BSE and NSE. on July 3, 2024.
Incorporated in June 2004, Vraj Iron and Steel Limited manufactures Sponge Iron, M.S. Billets, and TMT bars under the brand Vraj. The company runs two manufacturing plants in Raipur and Bilaspur, Chhattisgarh. Its 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.
Vraj Iron and Steel Limited’s revenue increased by 24.87 percent and profit after tax (PAT) rose by 88.12 percent between the financial year ending with March 31, 2023 and March 31, 2022.
Most brokerages had recommended subscribing to the IPO.
Swastika Investmart has recommended a “subscribe” rating to the mainboard issue of Vraj Iron and Steel, highlighting the company’s robust financial performance over the past three years with a strong focus on profitability. However, they caution potential investors to consider certain risks. These include the concentration of manufacturing facilities in a single region and the absence of long-term customer contracts. Moreover, operating in the competitive steel industry exposes Vraj Iron and Steel to supply disruptions and fluctuations in raw material prices. Despite these challenges, the IPO’s price-to-earnings (P/E) valuation of 9.48x is deemed reasonable. Swastika Investmart suggests subscribing to the IPO, citing potential for long-term growth and the possibility of modest listing gains.
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