Vraj Iron & Steel IPO: Check latest GMP as focus shifts to allotment on July 1

As the last date for bidding for the initial public offering (IPO) of Vraj Iron & Steel is approaching, investors have now turned their focus to the allotment, which is likely to be finalised on Monday, July 1, 2024.

The Rs 171-crore issue was open for subscription between June 26-28 within a price band of Rs. 195-207.

According to Chittaurgarh.com, shares of Vraj Iron & Steel Ltd are available at a premium 75 per cent in the grey market today. This reflects the estimated listing price ₹ 282, a premium of 36.23 per cent over the issue price 207. GMP remained unchanged in the previous session on June 28, 2024, but was higher 90 on 27 June 2024.

The IPO witnessed huge demand from investors. In 3 days of bidding, it was subscribed 126.36 times. Investors placed bids for 73.07 crore shares against 57.82 lakh shares. The non-institutional investors category saw the highest bids at 221.66 times, while the qualified institutional buyers (QIBs) portion was subscribed 173.99 times. Meanwhile, the retail investors portion was subscribed 58.31 times.

Vraj Iron & Steel IPO Details

The issue is entirely a fresh issue of 0.83 crore shares. 171 Crores. The Company proposes to use the net proceeds for: 1) financing capital expenditure for the “Expansion Project” at Bilaspur Plant, 2) repayment or prepayment of borrowings availed by the Company from HDFC Bank for funding capital expenditure for the “Expansion Project” at Bilaspur Plant, 3) capital expenditure for the “Expansion Project” at Bilaspur Plant, and 4) general corporate purposes.

The minimum lot size for application is 72 shares. The minimum investment amount required by retail investors is 14,904.

In this issue, 35 percent of the issue is reserved for NII, 20 percent for QIB and 15 percent for retail investors. At the same time, 30 percent of the issue is reserved for anchor investors.

Aryaman Financial Services Limited is the Book Running Lead Manager to the Vraj Iron & Steel IPO, while Bigshare Services Private Limited is the registrar to the issue.

The book build issue is proposed to be listed on BSE and NSE on July 3, 2024.

Incorporated in June 2004, Vraj Iron & Steel Limited manufactures sponge iron, MS billets and TMT bars under the Vraj brand. The company operates two manufacturing plants in Raipur and Bilaspur, Chhattisgarh. Its product portfolio includes sponge iron, TMT bars, MS billets and by-products such as dolocher, pellets and pig iron, catering to a mix of industrial customers and end users.

Vraj Iron & Steel Limited's revenue grew by 24.87 per cent and profit after tax (PAT) grew by 88.12 per cent between the financial year ending March 31, 2023 to March 31, 2022.

Most brokerages had recommended investing in the IPO.

Swastika Investmart recommends a “Subscribe” rating to Vraj Iron & Steel's mainboard issue, highlighting the company's strong financial performance over the past three years, with a particular focus on profitability. However, they caution potential investors to consider certain risks. These include the concentration of manufacturing facilities in a single region and the absence of long-term customer contracts. In addition, operating in a competitive steel industry exposes Vraj Iron & Steel to supply disruptions and fluctuations in raw material prices. Despite these challenges, the IPO's price-to-earnings (P/E) valuation of 9.48x is considered reasonable. Swastika Investmart recommends subscribing to the IPO, citing long-term growth potential and the possibility of modest listing gains.

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