Vraj Iron and Steel GMP: Will there be a listing pop at the bourses tomorrow?

Vraj Iron and Steel, a manufacturer of sponge iron, MS Billets, and TMT bars, is gearing up for a robust stock market debut on Wednesday, going by the grey market trends.

In the unlisted market, the company's shares are trading with a premium of Rs 67, which translates to a listing gain of 32% if the trends are sustained.

However, it is important to note that grey market premiums are just an indicator as to how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

The listing surge aligns perfectly with the extraordinary subscription of 126.36 times, showcasing immense investor confidence in Vraj Iron and Steel's potential, analysts said.

"The company's financial performance paints a positive picture. Vraj Iron has a proven track record of consistent profitability over the past three years, demonstrating its ability to generate healthy returns," said Shivani Nyati, Head of Wealth, Swastika Investmart.

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.

"Despite these considerations, the IPO's P/E valuation of 9.48x appears reasonable. This, coupled with the company's strong fundamentals, impressive subscription, and soaring GMP, suggests a good listing with significant gains for early investors," Nyati added.

The company proposes to utilise the net proceeds towards funding for its capital expenditure requirement towards the expansion of project at Bilaspur Plant estimated to be at Rs 164.50 crore and the balance amount towards general corporate purposes.

Vraj Iron has already deployed a 70 crore loan from HDFC Bank, which is proposed to be repaid from net proceeds of the IPO. For the balance amount of Rs 94.5 crore, the company has already deployed Rs 32 crore from internal accruals and further wish to deploy Rs 3 crore from internal accruals.

Chhattisgarh-based Vraj Iron and Steel is engaged in manufacturing of Sponge Iron, M S Billets, and TMT bars under the brand Vraj. The company currently operates through two manufacturing plants which are located at Raipur and Bilaspur in Chhattisgarh spread across 52.93 acres.

As of March 2023, the aggregate installed capacity of its manufacturing plants was 2.31 lakh tons per annum. Its product offerings such as Sponge Iron, TMT Bar, MS Billets and by-products Dolochar, Pellet and Pig Iron cater to a mix of customers that consist of industrial customers and end-users.

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