Vraj Iron and Steel Limited (VISL) is a manufacturer of steel products like sponge iron, billets, and TMT bars. They are planning an initial public offering (IPO) to raise ₹171.00 Crore through a fresh issue of equity shares. Here’s a summary of the key details:

IPO Timeline

IPO Open Date:	June 26, 2024
IPO Close Date:	June 28, 2024
Basis of Allotment:	July 1, 2024
Refunds:	July 2, 2024
Credit to Demat Account:	July 2, 2024
IPO Listing Date:	July 3, 2024

About Company

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Established in June 2004, Vraj Iron and Steel Limited specializes in producing Sponge Iron, M.S. Billets, and TMT bars marketed under the Vraj brand. The company operates two manufacturing facilities spanning 52.93 acres in Raipur and Bilaspur, Chhattisgarh. As of March 31, 2023, the combined annual capacity of the plants stood at 231,600 tons, encompassing both intermediate and final products. Currently, the company can manufacture 57,600 TPA of MS Billets, which are further processed by its rolling mills to yield TMT Bars with an annual production capacity of 54,000 tons. Vraj’s product range includes Sponge Irons, TMT Bars, MS Billets, and by-products like Dolochar, Pellets, and Pig Iron, serving a diverse clientele of industrial customers and end-users.

• VISL operates two manufacturing plants in Chhattisgarh with a combined capacity of 231,600 tons per year.
• They are currently expanding their capacity to 500,100 tons and are installing a captive power plant to meet their energy needs.
• The company’s products cater to the construction and infrastructure sectors in India.

Objective

• Funding for Capital Expenditure towards the “Expansion Project” at Bilaspur Plant:
• Repayment or prepayment of borrowings from HDFC Bank obtained by the company for the capital expenditure towards the “Expansion Project” at Bilaspur Plant; and
• Capital expenditure towards the “Expansion Project” at Bilaspur Plant.
• General Corporate Purposes.

POSITIVE

• Growing Steel Industry: The Indian steel industry is expected to experience growth due to government infrastructure projects and rising urbanization.
• Capacity Expansion: VISL’s capacity expansion plans could position them to benefit from this growth.
• Captive Power Plant: Setting up a captive power plant could potentially reduce their dependence on the external grid and ensure a more stable power supply for production.pen_spark

NEGATIVE

• Competition: The steel industry is highly competitive, with several established players.
• Raw Material Price Fluctuations: Prices of key raw materials like iron ore and coal can fluctuate, impacting VISL’s production costs and profitability.
• Regulatory Environment: The steel industry is subject to government regulations, including environmental norms, which can impact production processes and costs.

So,how does Vraj Iron and Steel Limited IPO Fare in Terms of Financials ?

Financial Details

Period Ended	31 Dec 2023	31 Mar 2023	31 Mar 2022	31 Mar 2021
Assets	253.05	191.54	150.77	126.33
Revenue	304.81	517.42	414.38	290.93
Profit After Tax	44.58	54.00	28.70	10.99
Net Worth	187.50	140.92	87.14	57.79
Reserves and Surplus	162.78	135.97	82.19	52.85
Total Borrowing	49.30	22.98	42.51	45.78
Amount in ₹ Crore

FINANCIAL REVIEW

Positives:

• Revenue Growth: VISL shows impressive revenue growth (44.2% year-over-year) in the latest period (ending Dec 2023), indicating significant business expansion.
• Profitability: The company has maintained profitability throughout the period, with Profit After Tax (PAT) increasing in the latest quarter.

Vraj Iron and Steel Limited IPO Review & Details IPO Valuation :

Earning Per Share (EPS):	₹ 21.84 per Equity Share
Price/Earning P/E Ratio:	9.48
Return on Net Worth (RoNW):	23.78%
Net Asset Value (NAV):	₹ per Equity Share

Vraj Iron and Steel Limited IPO – SWOT Analysis

Strengths

• Revenue Growth: Vraj Iron and Steel Limited boasts impressive revenue growth, indicating business expansion and potential to capitalize on the growing steel industry in India.
• Capacity Expansion: Their planned capacity expansion positions them to meet the rising demand for steel in the country.
• Integrated Manufacturing Setup: VISL’s integrated manufacturing setup streamlines production processes and potentially improves operational efficiency.
• Captive Power Plant: The upcoming captive power plant could reduce dependence on the external grid and ensure a more stable power supply, potentially lowering production costs.

Weaknesses

• Dependence on Raw Material Prices: VISL’s profitability is vulnerable to fluctuations in iron ore and coal prices, which are essential raw materials for steel production.
• Competition: The Indian steel industry is highly competitive, with established players vying for market share. VISL will need to differentiate themselves to compete effectively.
• Limited Track Record: As a relatively young company, VISL might have a limited track record of profitability and navigating market fluctuations.

Opportunities

• Government Focus on Infrastructure: The Indian government’s focus on infrastructure development projects creates a strong demand for steel, potentially benefiting VISL.
• Focus on Value-Added Products: By expanding its product portfolio to include value-added steel products, VISL can potentially command higher margins.
• Export Potential: VISL can explore exporting steel products to international markets, especially in light of rising global steel demand.

Threats

• Economic Downturn: An economic slowdown could decrease demand for steel and impact VISL’s sales and profitability.
• Changes in Government Regulations: Stringent environmental regulations or trade policies could increase production costs or limit VISL’s operations.
• Technological Advancements: New technologies in steel production could disrupt the industry and require VISL to adapt to remain competitive.pen_spark

COMPETITIVE ANALYSIS: MARKET PEERS

Here are some of the key market peers of Vraj Iron & Steel Limited IPO :

Peers:

• Tata Steel Limited (TSL): One of the largest steel producers in India with a diversified product portfolio across various steel grades and segments.
• JSW Steel Limited (JSW): A major player known for its flat steel products like hot rolled coils and cold rolled coils, catering to the automotive and construction sectors.
• ArcelorMittal Nippon Steel India Limited (AMNS): A joint venture between ArcelorMittal and Nippon Steel Corporation, focusing on high-grade flat steel products for the automotive and appliance industries.
• SAIL (Steel Authority of India Limited): A state-owned enterprise and a major producer of long steel products like bars, rods, and rails, catering to the construction and infrastructure sectors.pen_spark

Vraj Iron and Steel Limited IPO GMP

• Grey market premium as on 26-06-2024 = Rs / Share

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Vraj Iron and Steel Limited IPO

🔴 Live Subscription Status 🔴

26/06/2024 10:00 AM

	NO OF SHARES OFFERED	Day 1	Day 2	Day 3
Qualified Institutional Buyers(QIBs)
Non Institutional Investors(NIIs)
Retail Individual Investors(RIIs)
Total

FINAL TAKEAWAY

✅ May Apply

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I have a lot of other things that also need to be considered and those are something that I will cover in my next post.

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