Aditya Ultra Steel Limited, a key player in the steel industry, specializes in the manufacturing of rolled steel products, particularly TMT bars under the Kamdhenu brand. These TMT bars are extensively used in the construction industry and for infrastructure development. The company manufactures these products using billets, which are processed through a reheating furnace and rolling mill, ensuring high-quality production that caters to the increasing demand for durable steel products across India.

In 2024, Aditya Ultra Steel is launching its Initial Public Offering (IPO), with the goal of raising ₹45.88 crores through a Fresh Issue of 74 lakh shares. The subscription period opened on September 09, 2024, and will close on September 11, 2024. The IPO price band is set between ₹59 and ₹62 per equity share, providing investors an opportunity to participate in the company’s growth.

The IPO is managed by Swastika Investmart Limited, which serves as the book-running lead manager, while CAMEO CORPORATE SERVICES LIMITED is the registrar. The shares are expected to be listed on the BSE NSE, with Sunflower Broking Private Limited acting as the sole market maker. The listing date is tentatively scheduled for Monday, September 16, 2024.

IPO Subscription and Allotment Details

Retail investors can subscribe to a minimum lot size of 2,000 shares, translating to a minimum investment of ₹124,000. High-Net-Worth Individuals (HNIs) must subscribe to at least two lots (4,000 shares), requiring a minimum investment of ₹248,000. The IPO allotment will be finalized by Thursday, September 12, 2024, with the shares to be credited by the listing date.

Investors can check their allotment status by following these steps:

Visit the IPO allotment status page on the registrar or NSE website.

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.

Objectives of the IPO

The Aditya Ultra Steel IPO proceeds will be utilized to meet several objectives:

₹1,535 lakhs will be directed toward capital expenditure for upgrading and expanding the company’s manufacturing infrastructure.

An additional ₹1,535 lakhs will be used to meet working capital requirements, ensuring smooth operations and financial liquidity.

The remaining funds will be allocated toward general corporate purposes and public issue expenses, helping the company manage operational costs and strengthen its financial position.

Company Background and Promoters

The promoters of Aditya Ultra Steel bring extensive experience to the table, ensuring that the company is managed with a strategic and growth-oriented approach. The promoters include:

Mr. Varun Manojkumar Jain

Mr. Sunny Sunil Singhi

Mrs. Varuna Jain

Together, they have a combined experience of over 17 years in the steel industry, with proven track records of success in managing and scaling steel manufacturing operations. Their leadership and vision are integral to the company’s future growth.

Financial Performance

Aditya Ultra Steel has demonstrated a steady financial performance over the past three fiscal years. The company’s revenue increased from ₹51,598.34 lakhs in FY22 to ₹53,048.91 lakhs in FY23, further growing to ₹58,856.29 lakhs in FY24. Although the EBITDA saw a slight decline from ₹1,091.53 lakhs in FY22 to ₹986.79 lakhs in FY23, it rebounded to ₹1,801.39 lakhs in FY24, indicating a recovery in profitability. Additionally, the PAT rose from ₹488.90 lakhs in FY22 to ₹792.34 lakhs in FY24, showcasing the company’s ability to improve its bottom line.

For the Aditya Ultra Steel IPO, the company is offering shares at a pre-issue EPS of ₹4.62 and a post-issue EPS of ₹3.19. The pre-issue P/E ratio is 13.41x, while the post-issue P/E ratio stands at 19.43x, compared to the industry P/E ratio of 20.61x. These financial metrics suggest that the IPO is fairly priced, and investors can expect moderate returns based on current financial data.

The company’s Return on Capital Employed (ROCE) for FY24 is 18.75%, and its Return on Equity (ROE) is 23.92%, both of which indicate efficient use of capital and resources.

Subscription and Grey Market Premium (GMP)

As of 06:00 PM on September 09, 2024, the live subscription status for the Aditya Ultra Steel IPO indicates that the issue has been subscribed 1.93 times on the first day of the subscription period. This is a promising start, reflecting strong investor interest in the IPO.

The Grey Market Premium (GMP) for Aditya Ultra Steel IPO is currently in the range of ₹6 to ₹10 per share, which translates to potential listing gains of 12% to 16%. However, it is important to note that Grey Market Premium is an unofficial indicator of demand and does not guarantee actual gains upon listing. The GMP is purely indicative and should be considered as a minor factor in decision-making.

IPO Review and Recommendation

Aditya Ultra Steel Limited has established a solid presence in the steel manufacturing industry, specifically in the production of TMT bars under the Kamdhenu brand. The company’s focus on infrastructure and construction sectors positions it well in a rapidly growing market. However, while the company’s revenue and PAT show steady growth, its EBITDA fluctuations and post-issue P/E ratio of 19.43x compared to the industry average suggests modest profitability.

Investors looking for short-term gains may find the IPO’s GMP of 12% to 16% attractive. However, given the company's financials and the valuation of the IPO, we recommend that investors avoid this IPO for long-term investment purposes. Short-term traders may benefit from the listing gains, but those seeking long-term growth may find better opportunities elsewhere.

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