Abha Power and Steel Limited brings over 20 years of experience in the manufacturing and supply of standard and customized products to a variety of industries, including Indian Railways, steel, cement, heavy engineering, mining, and power. The company has a strong track record of building and maintaining relationships with domestic and international customers across six countries, including the UAE, Qatar, Germany, Canada, Italy, Netherlands, and Nepal. Their focus on quality, safety, value, and price competitiveness has established them as a leader in the steel manufacturing sector.

The Abha Power and Steel IPO is a Fixed Price Issue amounting to ₹38.54 Crores, with 41.39 Lakh shares (worth ₹31.04 Crores) offered under the Fresh Issue, and 10.00 Lakh shares (worth ₹7.5 Crores) under the Offer for Sale. The IPO subscription period opens from November 27, 2024, and closes on November 29, 2024, with the allotment date expected on December 2, 2024, and the shares slated to be listed on the NSE SME platform on December 4, 2024. The share price has been set at ₹75 per equity share, with a market capitalization of ₹100.86 Crores at the IPO price.

Abha Power and Steel IPO Key Details:

• The lot size for the IPO is 1,600 shares, requiring a minimum investment of ₹1,20,000 for retail investors. For High-Net-Worth Individuals (HNIs), the minimum investment is 2 lots (3,200 shares), amounting to ₹2,40,000.
• Horizon Management Private Limited is the book-running lead manager, while Skyline Financial Services Private Limited is the registrar for the IPO. Giriraj Stock Broking Private Limited acts as the market maker.

Abha Power and Steel IPO Subscription and Allotment: As of November 29, 2024, the IPO has been subscribed 16.66 times on its final day of the subscription period. Investors can track the real-time subscription status on the NSE platform. Allotment details will be available on the registrar’s website starting December 2, 2024. Investors can check their allotment status by entering their application number, PAN, or DP Client ID.

Objectives of Abha Power and Steel IPO: The proceeds from the fresh issue will be utilized for:

1. ₹1,638.93 Lakhs for capital expenditure toward modernization and upgradation of manufacturing facilities in Bilaspur, Chhattisgarh.
2. ₹300 Lakhs for funding working capital requirements.
3. ₹745.06 Lakhs for general corporate purposes.

Financial Overview and Metrics: Abha Power and Steel has reported steady revenues from operations over the last three fiscal years:

• Fiscal 2024: ₹5,182.68 Lakhs
• Fiscal 2023: ₹5,511.82 Lakhs
• Fiscal 2022: ₹5,498.40 Lakhs
  
  

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The company’s EBITDA has improved significantly, from ₹211.11 Lakhs in FY2022 to ₹822.18 Lakhs in FY2024, reflecting its strong growth. The Profit After Tax (PAT) has shown positive performance in FY2024 and FY2023, with ₹378.19 Lakhs in both years, a substantial improvement over the loss of ₹71.53 Lakhs in FY2022.

For the IPO, the company has a pre-issue EPS of ₹2.62 and a post-issue EPS of ₹2.03, resulting in a pre-issue P/E ratio of 28.63x and a post-issue P/E ratio of 36.86x, against the industry P/E ratio of 26.65x. The company’s Return on Capital Employed (ROCE) for FY24 is 23.64%, and Return on Equity (RoE) is 24.17%, indicating reasonable profitability and operational efficiency.

Recommendation for Investors: The Grey Market Premium (GMP) for the IPO is currently ₹0, indicating no immediate listing gains. Given the company’s strong track record, improving financial performance, and competitive valuation, the IPO is fully priced. However, due to modest listing gain potential and valuation concerns, we recommend investors to avoid the Abha Power and Steel IPO for listing gains or long-term investment purposes. Investors should carefully evaluate their risk appetite before proceeding with the IPO.

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