Vraj Iron and Steel debuts with decent gains of 16% on both NSE, BSE

Shares of Vraj Iron and Steel in Wednesday’s trade listed with decent gains, largely falling short of expectations of a stellar market debut. On the BSE, the stock listed at a price of Rs 240, a premium of 16 per cent against its IPO issue price of Rs 207, while on the NSE also the stock started trade at Rs 240

Ahead of the listing, Shivani Nyati, Head of Wealth, Swastika Investmart  said the IPO’s P/E valuation appears reasonable plus the company's strong fundamentals, impressive subscription, and soaring GMP, suggests a good listing with significant gains for early investors.

The IPO offer that remained open between June 26-June 28 garnered strong investor response with a total subscription of 126.36x, largely led by non-institutional investor (NII) and qualified institutional buyer (QIB) category.

From the retail segment, the issue fetched a subscription of 58.31 times the available quote, while the subscription rate was 221.66 times and 173.99 times in the NII and QIB investor category, respectively.

The company aims to deploy the proceeds from the issue to fund capital expenditure towards the “expansion project” at Bilaspur plant, repay or prepay borrowings from HDFC Bank and other general corporate purposes.

Nyati noted that 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. 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 steel industry's inherent competitiveness is another factor to consider.

Vraj Iron and Steel is into the manufacturing of sponge iron, MS billets, and TMT bars under the brand Vraj. It caters to a mix of customers that consist of industrial customers and end-users.