The state-owned iron & steel products company had made a weak debut by listing at Rs 87, a 3.3% lower against issue price of Rs 90 on the NSE and the BSE. A discount of Rs 3- on the offer price was offered to retail individual bidders and to eligible employees bidding in the employee reservation portion.
MIDHANI had raised Rs 4,384 million through initial public offer (IPO). The issue managed to subscribe 1.21 times, mainly on account of the decent response from the qualified institutional buyers (QIBs). The QIB category of the IPO was subscribed1.95 times, while retail individual investors (RIIs) category was subscribed 0.72 times and of non institutional investor’s category by merely 0.12 times.
MIDHANI, a Mini Ratna, Category-I status company - is one of the leading manufacturers of special steels, superalloys and only manufacturer of titanium alloys in India. These are high value products which cater to niche end user segments such as defence, space and power.
According to Frost & Sullivan analysis, the domestic demand of high value specialty steel, superalloys and titanium alloy has grown at a steady rate of around 5.8% over 2011-16. Aerospace and defence sector were the key demand driver and contributed around 70% of the overall demand in 2016. Going forward, with initiative like Make in India and investment in the defence, space and aviation sector, the demand of these products would increase by 6.5% during 2016-21.
The issue seems to be attractively priced considering its strategic importance, monopoly position in some of its products, virtually debt free operations and healthy financial performance. MIDHANI has not reported a decline in the revenue in the last 14 years. However, due to the shutdown of one of its hot press (to carry out repair & modernization works), this year (i.e. FY18) it is likely to report a drop in the business. Nevertheless, with the restart in the press in FY19, the company is once again expected to have normal operations, Choice Broking said in an IPO note.