Abha Power and Steel Limited, a Bilaspur-based manufacturer catering to industries like Indian Railways, steel, cement, mining, and power, has launched its IPO on November 27, 2024.

• IPO Size: ₹38.54 Crores
  • Fresh Issue: 41.39 lakh shares worth ₹31.04 Crores
  • Offer for Sale (OFS): 10 lakh shares amounting to ₹7.5 Crores
• Issue Price: ₹75 per equity share
• Market Capitalization at IPO Price: ₹100.86 Crores
• Lot Size: 1,600 shares (minimum investment ₹1,20,000 for retail investors).
• Subscription Period: November 27-29, 2024
• Listing: NSE SME, tentative listing date December 4, 2024
• Registrar: Skyline Financial Services Private Limited
• Lead Manager: Horizon Management Private Limited

Objectives of the IPO

Proceeds from the fresh issue are allocated to:

1. Modernization of Facilities: ₹1,638.93 Lakhs to upgrade and expand manufacturing units in Bilaspur.
2. Working Capital Requirements: ₹300.00 Lakhs.
3. General Corporate Purposes: ₹745.06 Lakhs.

Financial Performance and Metrics

Key Metrics:

• Pre-Issue EPS: ₹2.62
• Post-Issue EPS: ₹2.03
• Pre-Issue P/E: 28.63x
• Post-Issue P/E: 36.86x
• Industry P/E: 26.65x
• ROCE (FY24): 23.64%
• ROE (FY24): 24.17%

Analysis: While the company shows significant improvement in EBITDA and profitability, its valuation is relatively high compared to the industry average P/E ratio.

Grey Market Premium (GMP)

The GMP for Abha Power and Steel IPO is currently ₹0, indicating no speculative premium. GMP is often used to gauge listing day gains but is not always reliable as an investment metric.

Subscription Status (Day 1)

As of 5:25 PM on November 27, 2024, the IPO is subscribed 1.20 times, with participation driven by retail investors and High-Net-Worth Individuals (HNIs).

Allotment and Listing Details

• Allotment Date: December 2, 2024
• Listing Date: December 4, 2024

How to Check Allotment Status:

1. Visit the registrar's website or the NSE SME portal.
2. Select "Abha Power and Steel IPO" from the dropdown.
3. Enter your Application Number, PAN, or DP Client ID and submit to view your allotment status.

Company Strengths

1. Industry Diversification: Caters to key sectors like Indian Railways, power, and heavy engineering, reducing dependence on a single industry.
2. Export Presence: Established relationships with customers in UAE, Qatar, Germany, Canada, Italy, Netherlands, and Nepal.
3. Experienced Promoters: Over 20 years in the foundry business.

Concerns and Risks

1. Valuation Concerns: High P/E ratios make the IPO seem fully priced, limiting potential listing gains.
2. Reliance on Capex Funding: Success depends on effective deployment of IPO proceeds for facility modernization.
3. Competitive Market: Operating in a price-sensitive and competitive industry with modest revenue growth.

IPO Review and Recommendation

Given the company’s financial performance and valuation:

• Listing Gains: The absence of a GMP premium suggests limited upside potential for short-term investors.
• Long-Term Investment: The high valuation and modest revenue growth make this IPO less attractive for long-term gains.

Investors are advised to avoid the IPO for listing gains. Those with a high-risk appetite and a belief in the company’s modernization plan can consider investing for long-term potential, though caution is warranted.

The Upcoming IPOs in this week and coming weeks are  Agarwal Toughened, Ganesh Infraworld, Suraksha Diagnostic, Property Share REIT, Rosmerta Digital, Avanse Financial and Nisus Finance.

The Current active IPO is Apex Ecotech, Abha Power and Steel, Rajputana Biodiesel, and Rajesh Power Services.

For more insights into financial trends , visit our Top News Headlines. You can also explore investment opportunities in the market and apply for upcoming IPOs through our Best IPO to Apply Now section.