Abha Power and Steel Limited, an established player in the industrial steel and iron foundry sector, has launched its Initial Public Offering (IPO) with a Fixed Price Issue of ₹38.54 Crores. This includes a Fresh Issue of 41.39 Lakh Shares worth ₹31.04 Crores and an Offer for Sale (OFS) of 10 Lakh Shares valued at ₹7.5 Crores. The subscription period for this IPO runs from November 27, 2024, to November 29, 2024. The allotment of shares is expected to be finalized on December 2, 2024, with shares slated to list on the NSE SME platform by December 4, 2024.

The IPO price is set at ₹75 per equity share, and the total market capitalization at this price will amount to ₹100.86 Crores. The minimum lot size for the IPO is 1,600 shares, requiring an investment of ₹1,20,000 for retail investors, while High Net-Worth Individuals (HNIs) will need to invest in at least two lots (3,200 shares), totaling ₹2,40,000.

IPO Subscription and Allotment Details

As of the final day of the subscription period, November 29, 2024, the Abha Power and Steel IPO has been subscribed 16.66 times, signaling a strong investor interest. The final allotment will be announced on December 2, 2024, and investors can check their allotment status by visiting the registrar's website. To check, investors will need to select the IPO from a dropdown menu and enter their application number, PAN, or DP Client ID.

Fund Utilization and Objectives

The proceeds from the Fresh Issue will be used for several purposes:

1. ₹1,638.93 Lakhs for capital expenditure to modernize and upgrade manufacturing facilities in Bilaspur, Chhattisgarh, expanding their product portfolio.
2. ₹300.00 Lakhs to meet working capital requirements.
3. ₹745.06 Lakhs for general corporate purposes.

Company Overview

Abha Power and Steel has been a significant player in the steel and iron foundry business for nearly two decades, manufacturing high-quality cast products in a variety of grades. Located in Chhattisgarh, a hub for steel production in India, the company serves both domestic and international markets, exporting products to over six countries, including the UAE, Germany, Canada, and Italy.

The company is certified by the Research Designs and Standards Organization (RDSO) and holds a PED Certificate from TUV-Nord, enabling them to supply pressure equipment to European nations. With over 1000 products and a focus on customization, Abha Power and Steel is positioned as a strategic supplier for industries such as Indian Railways, cement, mining, power, and more.

Competitive Strengths and Strategies

Abha Power and Steel’s competitive strengths include a diverse product portfolio, advanced manufacturing facilities, a captive power plant, and strong customer relationships. The company’s strategies to drive growth include:

• Upgrading manufacturing capabilities to improve product offerings
• Expanding its customer base and geographical reach
• Focusing on advanced technology products to remain competitive

The company also aims to strengthen its marketing network and increase operational efficiency to continue delivering value to consumers.

Risks and Concerns

Despite its strong position, the company faces risks such as reliance on local suppliers for raw materials, regional revenue concentration, and exposure to strict environmental regulations. Additionally, competition from larger units and operational risks related to equipment failure and obsolescence could impact its business.

The Steel and Foundry Industry in India

India’s steel industry is experiencing significant growth, with the country being the second-largest producer of crude steel globally. Steel is a vital material for various sectors, including infrastructure, automobiles, and railways. The demand for steel is expected to grow due to rising infrastructure construction and the development of the automobile sector, positioning companies like Abha Power and Steel to benefit from this expansion.

The Indian foundry industry, where Abha Power and Steel operates, is also poised for growth. India is the second-largest producer of castings globally, and the industry is expected to reach USD 25 billion by 2025. This growth is driven by innovations and modernization, particularly in smaller and medium-sized foundries.

Conclusion

Abha Power and Steel’s IPO offers a unique opportunity for investors looking to capitalize on the growth of India’s steel and foundry sectors. With a robust product portfolio, a focus on quality, and a strong track record, the company is well-positioned for long-term growth. However, investors should carefully consider the associated risks and the current market conditions before making investment decisions.

The Upcoming IPOs in this week and coming weeks are Property Share REIT, Nisus Finance, Emerald Tyre Manufacturers, Rosmerta Digital and Avanse Financial. The Current active IPO is Ganesh Infraworld, Suraksha Diagnostic, Agarwal Toughened.
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