Vraj Iron hits upper circuit after listing at 16% premium over issue price

Vraj Iron and Steel hits upper circuit post listing: Shares of Vraj Iron and Steel were locked in the 5 per cent upper circuit on the BSE on Wednesday, after making a decent debut on the NSE and BSE earlier today.

At 2:32 PM, the shares were locked at Rs 251.95 per share as against the BSE Sensex's 0.56 per cent rise. Vraj Iron and Steel listed at Rs 240 apiece on both the BSE and NSE, marking a premium of 15.94 per cent over its IPO price of Rs 207 per share.

“Vraj Iron & Steel has debuted at Rs. 241, i.e., +16 per cent above its issue price, and received a good listing. A manufacturer of Spong Iron, MS Billets, and TMT bars. The company's financial performance paints a positive picture. Vraj Iron & Steel has a proven track record of consistent profitability over the past three years, demonstrating its ability to generate healthy returns,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

However, Nyati opined that investors should acknowledge certain risks, such as the concentration of manufacturing facilities in a single region and the lack of long-term customer contracts. The steel industry's inherent competitiveness, she believes, is another factor to consider. 

Despite these considerations, the IPO's price to earnings (P/E) valuation of 9.48x appears reasonable. Considering these factors and the current market sentiment, we maintain a buying rating with a stop-loss of Rs 240 for the target of Rs 300,” Nyati added.

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Subscription status

The IPO garnered major investor interest, being oversubscribed by a massive 119.04 times. The qualified institutional bidders (QIBs) subscribed 163.90 times, while non-institutional investors subscribed 208.81 times. Retail investors also showed strong interest, with their portion oversubscribed 54.93 times during the three-day bidding process.

The company plans to use the funds for capital expenditure related to the "Expansion Project" at the Bilaspur Plant, including repayment or prepayment of borrowings from HDFC Bank secured for this purpose. Additionally, funds will support general corporate purposes.

Vraj Iron and Steel IPO details

Vraj Iron and Steel IPO is a book-built issue of Rs 171 crore. The issue is entirely a fresh issue of 0.83 crore shares.

The subscription for the Vraj Iron and Steel IPO opened on June 26, 2024, and closed on June 28, 2024.

The price band for the IPO ranged from Rs 195 to Rs 207 per share.

Retail investors could apply for a minimum lot size of 72 shares, requiring an investment of at least Rs 14,904. Non-institutional investors (NII) have minimum lot size requirements of 14 lots (1,008 shares), amounting to Rs 208,656, while qualified institutional buyers (QIBs) must invest in 68 lots (4,896 shares), totaling Rs 1,013,472.

The market capitalisation of Vraj Iron and Steel is Rs 831 crore, according to Bombay Stock Exchange (BSE).