Vraj Iron IPO - Investment Rationale, Financials, Strengths, Risks And More: Anand Rathi

Anand Rathi Report

Vraj Iron and Steel Ltd. launched its initial public offering today and the issue will close for subscription on June 28. The manufacturer of Sponge Iron, M.S. Billets, and TMT bars has fixed the price band in the range of Rs 195-207. The minimum order lot is 72.

The Rs 171 crore IPO consists of a fresh issue of 82,60,870 shares worth approximately Rs 171 crore. There is no offer-for-sales.

Objects fresh Issue

• Funding for Capital Expenditure towards the "Expansion Project" at Bilaspur Plant.

• Repayment or prepayment of borrowings for the capital expenditure towards the "Expansion Project" at Bilaspur Plant.

• General Corporate Purpose.

Valuation

Vraj Iron is an integrated and well-established manufacturing setup with diversified product mix with strong focus on value added products and manufacturing plants are strategically located, supported by robust architecture, leading to cost efficiencies and a stable supply chain along with Experienced Promoters, Board and management team.

At the upper price band company is valuing at price/earning of 12.65 times, enterprise value/Ebitda 9.09 times with a market cap of Rs 6,827 million post issue of equity shares and return on net worth of 38.82%.

We believe that the IPO is fairly priced and recommend a “Subscribe- Long Term” rating to the IPO.

Click on the attachment to read the full IPO report:

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