Vraj Iron And Steel IPO: All You Need To Know
Price band for the Vraj Iron IPO is Rs 195–207 per share. The issue opens on June 26 and closes on June 28.
Vraj Iron and Steel Ltd. plans to raise up to Rs 171 crore through its initial public offering, which is set to open on Wednesday, June 26. The IPO consists of a fresh issue of 82,60,870 shares worth approximately Rs 171 crore. There is no offer-for-sales.
The company, which manufactures sponge iron, MS billets, and TMT bars, has set a price band of Rs 195–207 per share of a face value of Rs 10. The issue will close on Friday, June 28.
The minimum lot size for retail investors is 72 shares, requiring an investment of at least Rs 14,904. For small non-institutional investors, the minimum lot size is 14, amounting to Rs 2.08 lakh. According to the Red Herring Prospectus, the minimum lot size for big non-institutional investors is 68, which amounts to over Rs 10 lakh.
Issue Details
Issue opens: June 26.
Issue closes: June 28.
Issue price: Rs 195-207 per share.
Fresh issue: Rs 171 crore.
Total issue size: Rs 171 crore.
Bid lot: 72 shares.
Listing: BSE and NSE.
Use Of Proceeds
The company proposes to use the net proceeds for capital expenditure towards the "expansion project" at Bilaspur Plant and repayment or prepayment of loans taken from HDFC Bank Ltd. Additionally, it will use the remainder of the funds for general corporate purposes.
Business
Vraj Iron and Steel Ltd., established in June 2004, is a manufacturer of sponge iron, MS billets, and TMT bars, marketed under the Vraj brand. The company operates two manufacturing plants located in Raipur and Bilaspur, Chhattisgarh, spread across 52.93 acres. As of March 31, 2023, these plants have a combined installed capacity of 231,600 tonne per year, encompassing both intermediate and final products.
The production capacity includes 57,600 tonne per annum of MS billets, which are utilised by the company’s rolling mills to produce TMT bars with a capacity of 54,000 tonne per annum. Vraj Iron and Steel's product range also includes by-products such as dolochar, pellets, and pig iron, serving a diverse clientele comprising industrial customers and end-users.
Financials
The company's revenue from operations, between fiscal 2021 and 2023, grew at a compound annual growth rate of 33.2% reach Rs 515.7 crore. The company posted a profit of Rs 44.6 crore in the year ended March 2023.
Key Risk Factors
Geographical concentration risk is due to both facilities and the expansion project being in Chhattisgarh.
100% revenue from steel products makes the company vulnerable to demand and price volatility in the cyclical iron and steel industry.
The company has a history of negative cash flows from operating, investing, and financing activities. There is potential for future negative cash flows, too.
The Rs 129.5 crore needed for the Bilaspur Expansion Project is reliant on IPO proceeds, with no alternate funding, putting growth plans at risk.
The total project cost is Rs 164.5 crore, with Rs 62.5 crore yet to be ordered or paid, risking delays and cost overruns.
