A-One Steels IPO: Analysts rate 'subscribe' on long-term growth prospects

A-One Steels IPO review: Brokerages assigned a 'subscribe' rating to the issue, as earnings recovery, manufacturing scale, and planned debt reduction make it fundamentally interesting.

A-One Steels IPO Review: The initial public offer (IPO) of A-One Steels opened for subscription on Thursday. The Bengaluru-based steel manufacturer is seeking to raise ₹405 crore from the primary markets for the repayment of debt. 

 

Brokerages assigned a ‘Subscribe’ rating to the issue as A-One Steels’ earnings recovery, manufacturing scale, and planned debt reduction make the IPO fundamentally interesting. 

 

A-One Steels IPO price band, lot size

 

A-One Steels has set the IPO price band at ₹385 to ₹405 per share. The lot size is 37, making the minimum required investment amount ₹14,985. The IPO will close on September 28. 

 

The allotment is expected to be finalised on September 29, and the tentative listing date is October 1. 

 

 

The IPO is a combination of a fresh issue worth ₹355 crore and an offer-for-sale (OFS) worth ₹50 crore. The issue entails a reservation of up to 54,496 shares for employees offered at a discount of ₹38. 

A-One Steels IPO GMP 

 

The grey market premium (GMP) was quoting at ₹55, indicating a listing price of ₹460 or a listing gain of 13.58 per cent. 

 

A-One Steels IPO review 

 

Analysts are positive on A-One Steels IPO as they believe the company has room to grow with expansion plans on the horizon. However, to reap the benefit of the growth, investors are required to stay invested in the company for the long term, rather than treating the issue as a ‘no-risk listing gain’. 

 

The Bengaluru-based integrated steel manufacturer has a dominant regional presence in South India, with Karnataka leading the contribution to operations, followed by Tamil Nadu and Telangana. The core manufacturing facility is located in the mineral-rich Bellary-Koppal belt, which provides the company critical supply-chain integration and logistics cost efficiencies, SBI Securities said. 

 

“In FY26, it served 1,715 customers across distributors, direct retail, and institutional buyers, with repeat customers accounting for 54.2 per cent of the total client count and generating 80.3 per cent of finished product revenue,” the brokerage said.

 

A-One Steels reported revenue, earnings before interest, taxes, depreciation and amortisation (Ebitda), and profit after tax (PAT) CAGR of 4 per cent, 29.3 per cent, and 80.9 per cent, respectively, over the period between FY24 and FY26. The volume growth in the TMT bars and pipes and tubes, along with backward integration initiatives, supported earnings growth, said SBI Securities. 

 

The EBITDA margin improved to 7.29 per cent in FY26 from 4.91 per cent in FY25,  and the PAT increased to ₹127.4 crore, reflecting a considerable improvement in profitability, said Swastika in a note. 

 

Valuation rationale

 

At the upper price band of ₹405, A-One Steels is valued at post-issue adjusted P/E and EV/EBITDA multiples of 24.7 times and 12.9 times, respectively, according to SBI Securities. The brokerage has assigned a ‘Subscribe’ rating with a long-term view in mind. 

 

Swastika believes that A-One Steel’s premium is needed to be supported by sustained margin and earnings growth in the cyclical steel business, even though the valuation is below some of the company’s disclosed listed peers. “It is valued at an EV/EBITDA of approximately 13.55x. This places A-One Steels roughly in line with the industry average,” said the brokerage who has also assigned a ‘subscribe’ rating.

 

Key risks 

 

High raw material costs, revenue concentration in Karnataka, and high concentration of products in primary categories are some of the key risks for A-One Steels, according to SBI Securities. 

 

About Swastik Infra

 

A-One Steels is an integrated steel manufacturing and trading company with a specialisation in intermediate and finished long and flat steel products. The company has a total installed capacity of 1.7 million tons per annum (MTPA) for steel and industrial products and 5,70,000 MTPA for crude steel as of FY26.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.