Advice to bet on Vraj Iron & Steel IPO, what are the strengths and weaknesses of the company, stock review

Vraj Iron and Steel IPO : The IPO of Chhattisgarh based company Vraj Iron and Steel Limited has opened for subscription today on 26 June 2024. Investment in this IPO can be made till 28 June. The size of the IPO is Rs 171 crore. While the company has fixed the price band for this from Rs 195 to Rs 207 per share. Completely fresh equity shares will be issued in the IPO, there is no OFS in it. That is, the existing investors and promoters of the company are not selling a single share through Offer for Sale.

The company’s shares will be listed on the National Stock Exchange and Bombay Stock Exchange on July 3. Vraj Iron and Steel Limited manufactures steel products such as sponge iron, billets and TMT bars under the Vraj brand.

DDEL’s grand entry in the stock market, investors got 60% return in one go, should we sell it after making profit

Recommendation for subscribing

The brokerage house has given a subscribe rating on Vraj Iron and Steel IPO. The brokerage says that Vraj Iron and Steel Limited is poised to capitalize on the strong growth prospects of the steel industry driven by rapid urbanization, infrastructure development and government investment in key sectors. The steel industry is closely linked to GDP growth, with demand rising from infrastructure projects and housing development. The company’s strategic expansion plans are set to significantly increase its production capacity, which is currently at 231,600 tonnes per annum (TPA) and is expected to grow to 500,100 TPA by FY26.

This expansion, particularly the increase in the capacity of the captive power plant from 5 MW to 20 MW, will improve operational efficiency and cost management, thereby boosting future performance. Vraj Iron’s focus on high-margin products such as TMT bars and sponge iron along with strong cost management measures has led to consistent financial growth.

Jefferies bullish on Adani Group, buy, sell or hold? What rating on which stock?

Balance sheet expected to be strong

The brokerage says that the company’s strategy is to use the proceeds from the IPO to reduce loans, which will strengthen its balance sheet, reduce interest expenses and improve net profitability. The company reported healthy financial performance with total income growing at a CAGR of 33.4 per cent between FY21 and FY23. EBITDA grew at a CAGR of 67.2% between FY21 and FY23 and profit grew at a CAGR of 121.7 per cent between FY21 and FY23. The company’s ROE and ROCE in FY23 were recorded at 38.32 per cent and 44.98 per cent.

You can get a profit of Rs 19000 in 4 weeks by investing 1 lakh, these 4 stocks are ready to show their strength

How much reserve for whom

35% of the IPO is reserved for retail investors. While 50% quota is reserved for qualified institutional buyers and 15% for non-institutional investors. Retail investors can bid for a minimum of one lot i.e. 72 shares. As per the upper price band of the IPO of Rs 207, a minimum bid of Rs 14,904 will have to be made for 1 lot. At the same time, retail investors can invest a maximum of Rs 1,93,752 for a maximum of 13 lots i.e. 936 shares.

Vraj Iron And Steel GMP

There is also a grey market regarding the IPO of Allied Blenders (Vraj Iron and Steel IPO GMP)There is a craze in it. The unlisted stock of the company is trading at a premium of Rs 60 in the grey market. This premium is 29 per cent in terms of the upper price band of Rs 207. That is, the stock can be listed at Rs 267 as compared to the issue price of Rs 207.

(Disclaimer: Investing or selling stocks is advised by experts and brokerage houses. These are not the personal views of Financial Express. There are risks in the market, so take expert advice before investing.)