Vraj Iron and Steel IPO Lists At 16% Premium: Should Investors Hold, Sell or Buy?

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posted on 4 months ago — updated on 1 second ago

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Vraj Iron and Steel's shares listed at Rs 240, recording a jump of 15.94 per cent on both the BSE and NSE. Later, it zoomed 21.71 per cent to Rs 251.95 on the BSE; while on the NSE, the stock climbed 21.73 per cent to Rs 252.

Vraj Iron And Steel IPO Listing: Shares of Vraj Iron and Steel Ltd on Wednesday made their market debut with a premium of nearly 16 per cent against the issue price of Rs 207. The stock listed at Rs 240, recording a jump of 15.94 per cent on both the BSE and NSE. Later, it zoomed 21.71 per cent to Rs 251.95 on the BSE; while on the NSE, the stock climbed 21.73 per cent to Rs 252.

The company’s market valuation stood at Rs 831 crore.

Shivani Nyati, head of wealth at Swastika Investmart Ltd, said, “Vraj Iron & Steel has debuted at Rs 241, i.e., +16 per cent above its issue price, and received a good listing. A manufacturer of Spong Iron, M.S. Billets, and TMT bars. 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, she said.

“Despite these considerations, the IPO’s P/E valuation of 9.48x appears reasonable. Considering these factors and the current market sentiment, we maintain a buying rating of SL 240 for the target of 300+,” Nyati added.

The initial public offer of Vraj Iron and Steel got subscribed 119 times on the last day of bidding on Friday helped by heavy participation from institutional investors.

The Rs 171-crore initial share sale was entirely a fresh issue of equity shares with no offer-for-sale component. Shares were available for public subscription in the range of Rs 195 to Rs 207 per scrip.

The company will use the IPO proceeds for expansion projects at the Bilaspur facility in Chhattisgarh and general corporate purposes.

Raipur-based Vraj Iron and Steel is into manufacturing sponge iron, MS (Mid Steel) billets, and TMT (Thermo Mechanical Treatment) bars. It operates through two manufacturing plants at Raipur and Bilaspur in Chhattisgarh.