Vraj Iron and Steel IPO attracts strong investor
The initial public offering (IPO) of Vraj Iron and Steel saw robust investor interest on the second day of the bidding process. The issue, which was fully subscribed on the first day, continued to attract significant interest from retail and non-institutional investors.
Raipur-based Vraj Iron and Steel is offering its shares in the price range of Rs 195-207 each. Investors can apply for a minimum of 72 shares and multiples thereafter. The IPO aims to raise Rs 171 crore through the sale of 82,60,870 equity shares.
As of 10:55 pm on June 27, data showed that investors had bid for 3,42,69,192 equity shares, or 5.58 times the 61,38,462 equity shares on offer. The three-day bidding period will conclude on June 28.
The retail investor allocation was subscribed 7.60 times, while non-institutional investors saw a subscription of 4.83 times. The employee quota attracted bids 7.62 times the reserved shares, while the qualified institutional bidders (QIBs) portion was subscribed 14 percent.
Incorporated in June 2004, Vraj Iron and Steel manufactures Sponge Iron, M.S. Billets, and TMT bars under the brand Vraj. Its product portfolio includes Sponge Iron, TMT Bars, MS Billets, and by-products like Dolochar, Pellets, and Pig Iron, catering to both industrial customers and end-users.
The grey market premium for Vraj Iron and Steel remained strong after the first day of bidding. The company was commanding a premium of Rs 85 in the unofficial market, suggesting a potential listing gain of about 41 percent. Before the bidding opened, the grey market premium stood at around Rs 75.
Vraj Iron and Steel raised Rs 51.29 crore through an anchor book, allocating 24,78,259 equity shares at Rs 207 per share. For the nine months ending December 31, 2023, the company reported a net profit of Rs 44.58 crore and revenue of Rs 304.81 crore. For the financial year ending March 2023, it posted a net profit of Rs 54 crore and revenue of Rs 517.42 crore.
The IPO reserves 50 percent of the net offer for QIBs, 15 percent for non-institutional investors, and 35 percent for retail investors. Aryaman Financial Services is the sole book-running lead manager, while Bigshare Services is the registrar. Shares are set to be listed on both BSE and NSE, with a tentative listing date of July 3.
Brokerage Firms’ Recommendations:
Anand Rathi Research: Subscribe for long-term – Highlights the company’s integrated manufacturing setup, diversified product mix, and strategic plant locations, making the IPO fairly priced.
Swastika Investmart: Subscribe – Notes the company’s consistent financial performance and well-established manufacturing facilities but mentions risks like regional concentration and competitive market.
Arihant Capital Markets: Subscribe- Emphasizes the company’s significant capacity expansion and strategic location near raw material sources, indicating future growth potential.
SMIFS: Subscribe – Recommends the IPO for long-term investment, citing planned capacity expansions and debt reduction strategies as drivers of future profitability.
Marwadi Financial Services: Subscribe – Appreciates the company’s integrated setup and consistent growth, valuing it reasonably compared to peers.
Master Capital Services: Subscribe – Advises long-term investment based on the company’s capacity expansion plans for manufacturing and captive power plants.
StoxBox:Subscribe – Commends Vraj Iron’s cost-efficiency and plans to expand manufacturing capacity to enhance financial performance.
GEPL Capital:Subscribe – Highlights the company’s operational efficiency and strong financial track record, recommending the IPO for its growth potential.
