Vraj Iron and Steel shares list at 16% premium over IPO price

The shares of Vraj Iron and Steel debuted on the exchanges on Wednesday with a premium of 16%. The stock listed at Rs 240 on both NSE and BSE against an offer price of Rs 207.

Analysts believe the listing surge aligns perfectly with the extraordinary subscription of 126.36 times, showcasing immense investor confidence in Vraj Iron and Steel’s potential.

“The company’s financial performance paints a positive picture. Vraj Iron 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.

However, 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 company proposes to utilise the net proceeds towards funding for its capital expenditure requirement towards the expansion of the project at Bilaspur Plant estimated to be at Rs 164.50 crore and the balance amount towards general corporate purposes.Vraj Iron has already deployed a Rs 70 crore loan from HDFC Bank, which is proposed to be repaid from the net proceeds of the IPO. For the balance amount of Rs 94.5 crore, the company has already deployed Rs 32 crore from internal accruals and wishes to deploy Rs 3 crore from internal accruals.Chhattisgarh-based Vraj Iron and Steel manufactures Sponge Iron, M S Billets, and TMT bars under the Vraj brand. The company currently operates through two manufacturing plants, located at Raipur and Bilaspur in Chhattisgarh spread across 52.93 acres.As of March 2023, the aggregate installed capacity of its manufacturing plants was 2.31 lakh tons per annum. Its product offerings such as Sponge Iron, TMT Bar, MS Billets, and by-products Dolochar, Pellet, and Pig Iron cater to a mix of customers that consist of industrial customers and end-users.

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