Aditya Ultra Steel Limited made a solid debut on September 16, 2024, with shares listing at ₹69.90 on the NSE SME platform, marking a 12.74% premium over its IPO issue price of ₹62 per share. The IPO had garnered significant attention during its subscription period, reflecting strong demand from both retail and institutional investors.

About Aditya Ultra Steel Limited

Aditya Ultra Steel operates in the steel manufacturing industry, focusing on the production of TMT bars under the Kamdhenu brand. These bars are essential for the construction industry and are widely used in infrastructure development projects across India. The company’s manufacturing process includes the use of billets, which are reheated in a furnace and then processed through a rolling mill to produce high-quality TMT bars.

The company has gained a reputation for producing durable, high-performance steel products that meet the needs of a growing construction sector. Their strategic use of technology and stringent quality controls ensure that they remain competitive in the market.

Aditya Ultra Steel IPO Overview

The Aditya Ultra Steel IPO was a Book Built Issue valued at ₹45.88 crore, entirely composed of a Fresh Issue of 74 lakh shares. The IPO was open for subscription between September 9 and September 11, 2024, with a price band set between ₹59 and ₹62 per equity share. Investors were required to purchase a minimum lot size of 2,000 shares, with retail investors needing to invest at least ₹124,000. HNIs were required to buy at least 4,000 shares for a minimum investment of ₹248,000.

Swastika Investmart Limited was the book-running lead manager, while Cameo Corporate Services Limited was the registrar for the issue. Sunflower Broking Private Limited acted as the market maker.

Aditya Ultra Steel IPO Live Subscription Status

As of the final day of bidding on September 11, 2024, the Aditya Ultra Steel IPO was subscribed 10.22 times. The retail portion saw a subscription rate of 7.5x, while the non-institutional investors (NIIs) portion was subscribed 15.2x. The significant oversubscription indicates robust demand from investors, although the relatively high valuations have tempered expectations for substantial listing gains.

Investors can check their Aditya Ultra Steel IPO allotment status on the Cameo Corporate Services website by following these steps:

Go to the IPO allotment status page.

Select Aditya Ultra Steel Limited IPO from the dropdown list.

Enter your application number, PAN, or DP Client ID.

Submit the details to check your allotment status.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Aditya Ultra Steel IPO was estimated to range between ₹6 and ₹10 during the subscription period. This indicated potential listing gains of 12-16%, in line with the company's eventual 12.74% premium listing on the NSE SME platform. However, investors are advised to treat the GMP as speculative, as it is not an official indicator of the stock's long-term value.

Financial Performance of Aditya Ultra Steel Limited

Aditya Ultra Steel has demonstrated a steady financial performance over the last few years. The company’s revenue increased from ₹51,598.34 lakhs in FY22 to ₹53,048.91 lakhs in FY23, and further to ₹58,856.29 lakhs in FY24. While EBITDA initially dropped from ₹1,091.53 lakhs in FY22 to ₹986.79 lakhs in FY23, it rebounded to ₹1,801.39 lakhs in FY24.

The company’s profit after tax (PAT) also saw fluctuations, dropping from ₹488.90 lakhs in FY22 to ₹277.66 lakhs in FY23, before increasing to ₹792.34 lakhs in FY24. This resurgence reflects the company’s ability to overcome challenges and continue growing its profitability.

IPO Valuation & Ratios

Aditya Ultra Steel issued shares at a pre-issue EPS of ₹4.62 and a post-issue EPS of ₹3.19. The company’s pre-issue P/E ratio stood at 13.41x, while the post-issue P/E ratio was 19.43x, which is slightly lower than the industry average P/E ratio of 20.61x. The company’s ROCE for FY24 is 18.75%, and its ROE stands at 23.92%, indicating efficient use of capital and solid profitability.

Use of IPO Proceeds

The funds raised from the Aditya Ultra Steel IPO will be allocated for the following purposes:

₹1,535 lakh will be used for capital expenditure to purchase new equipment and enhance production capacity.

Another ₹1,535 lakh will be used to meet working capital requirements.

Additional funds will be set aside for general corporate purposes and to cover public issue expenses.

Aditya Ultra Steel IPO Review and Recommendation

Aditya Ultra Steel's consistent financial growth and increasing profitability position it as a reliable player in the TMT bar manufacturing industry. The company has managed to rebound after a dip in EBITDA and PAT in FY23, showing resilience and potential for long-term growth.

While the 12.74% premium listing reflects strong market demand, the stock's high P/E ratio and reliance on the construction and infrastructure sectors may limit its appeal for short-term gains. The current financial performance suggests that the IPO is fairly priced and may offer potential for long-term investors who are confident in the steel industry's outlook.

However, given the moderate listing gains and the nature of the company’s operations, we recommend avoiding the Aditya Ultra Steel IPO for short-term listing gains. Long-term investors may consider adding this stock to their portfolio based on the company’s continued performance in the coming quarters.

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