Vraj Iron and Steel Debuts at 16% Premium

3 Jul 2024 , 09:51 AM

Vraj Iron and Steel, known for manufacturing sponge iron, MS billets, and TMT bars under the brand Vraj, debuted on the NSE and BSE at a 16% premium. The shares were listed at ₹240, a 15.94% increase over the issue price of ₹207.

The company’s initial public offering (IPO) garnered significant attention, with investors picking up 73.07 Crore equity shares, 119.04 times higher than the offer size of 61.38 lakh shares. Non-institutional investors (high net-worth individuals) led the way, buying 208.81 times their allotted quota. Qualified institutional buyers bid 163.9 times the reserved portion, while the part set aside for retail investors was booked 54.93 times.

Vraj Iron and Steel effectively manages its costs by utilizing in-house power plants. The company operates two manufacturing plants in Raipur and Bilaspur, Chhattisgarh, with an installed capacity of 2,31,600 tonnes per annum. The Raipur plant also includes a captive power plant with a capacity of 5 MW.

The company is currently expanding its manufacturing plants and captive power plant to 5,00,100 tonnes per annum and 20 MW, respectively. The proposed expansion of the sponge iron and captive power plant is expected to become operational by Q4FY25, while the MS billets expansion is expected to be operational by Q1FY26.

Chhattisgarh-based Vraj Iron and Steel reported a remarkable 88.1% year-on-year growth in net profit, reaching ₹54 Crore for the fiscal year 2023, driven by strong operating numbers. Revenue for the year increased by 24.5% to ₹515.7 Crore compared to the previous year.

On the operating front, the company’s EBITDA (earnings before interest, tax, depreciation, and amortization) for the financial year 2023 grew by 63.7% to ₹81.3 Crore, with a margin expansion of 378 basis points to 15.77% compared to the previous year.

Use of IPO Proceeds

The company raised ₹171 Crore through the fresh issue at the upper end of the price band of ₹195-207 per share. Of the net fresh issue proceeds, ₹129.5 Crore will be allocated for the expansion project at the Bilaspur plant, with the remainder used for general corporate purposes.