Vraj Iron and Steel IPO Fully Subscribed In Early Bidding: Should You Apply? Check GMP, Price, Review

Vraj Iron and Steel IPO: The initial public offering (IPO) of Vraj Iron and Steel Ltd opened for public subscription on Wednesday, June 26. The Rs 171-crore IPO, which will conclude on June 28, has already been fully subscribed within the first hour of its opening.

Till 11:25 am on the first day of bidding, the IPO has been fully subscribed and has received 1.03 times subscription garnering 59,46,192 shares as against 57,82,609 shares on offer.

Vraj Iron and Steel IPO Key Dates: Subscription, Allotment And Listing

The Vraj Iron and Steel IPO will remain open between June 26 and June 28. Its allotment will likely be finalised on June 29, while its listing will take place on both BSE and NSE on July 3.

Vraj Iron and Steel IPO: Price and Lot Size

The price band of the IPO has been 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 75 higher in the grey market as compared with its issue price. The Rs 75 grey market premium or GMP means the grey market is expecting a 36.23 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 supplychain
• 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 initial public offering (IPO) is entirely a fresh issue of equity shares with no offer-for-sale component.

Ahead of the IPO, Vraj Iron and Steel has raised a little over Rs 51 crore from anchor investors.

The company will use the IPO proceeds for expansion projects at the Bilaspur facility and general corporate purposes.

Raipur-based Vraj Iron and Steel is into manufacturing sponge iron, MS (Mid Steel) billets, and TMT (Thermo Mechanical Treatment) bars.

It operates through two manufacturing plants at Raipur and Bilaspur in Chhattisgarh.

After implementation of the expansion project, the company expects to increase its aggregate installed capacity from 2,31,600 tonne per annum (TPA) to 500,100 TPA and captive power plants’ aggregate installed capacity from 5 MW to 20 MW, the RHP noted.

Aryaman Financial Services is the sole book-running lead manager, while Bigshare Services is the registrar for the IPO. Equity shares of both companies are proposed to be listed on the NSE and BSE.