Kalana Ispat Limited, known for its tailored billet solutions, is set to launch its Initial Public Offering (IPO) on September 19, 2024. The company aims to raise ₹32.59 crores through a fixed price issue consisting of 49.38 lakh shares. The subscription period will close on September 23, 2024, with allotments expected to be finalized on September 24, 2024. The shares are anticipated to be listed on the NSE SME Exchange on or around September 26, 2024.

Investment Details

The share price for the Kalana Ispat IPO is fixed at ₹66 per equity share, with a minimum lot size of 2,000 shares. This means retail investors need to make a minimum investment of ₹132,000, while High-Net-Worth Individuals (HNIs) must invest in at least two lots, totaling ₹264,000.

Jawa Capital Services Private Limited serves as the book-running lead manager, while Skyline Financial Services Private Limited is the registrar for the issue. Aftertrade Broking Private Limited is the sole market maker for this IPO.

Grey Market Premium and Subscription Status

As of September 20, 2024, the Grey Market Premium (GMP) for Kalana Ispat IPO is projected to be around ₹20. However, it's important to note that GMP figures are based on informal trading and should not be solely relied upon for making investment decisions.

Real-time subscription data shows that as of 5:00 PM on September 20, 2024, the IPO has been subscribed 4.13 times on its second day of the subscription period, indicating strong investor interest.

IPO Objectives

The proceeds from the IPO will be allocated as follows:

₹2,298.75 lakhs for capital expenditure related to the installation of a 4 MW DC & 3.5 MW AC ground-mounted solar power plant.

₹799.45 lakhs for setting up a rolling mill in Ahmedabad, which includes constructing an industrial shed and purchasing necessary equipment.

₹60.88 lakhs for general corporate purposes.

Company Overview and Financial Performance

Kalana Ispat specializes in providing customized billet solutions, driven by its expertise in metallurgy and engineering. Their commitment to sustainability aligns well with current market demands, and their track record reflects their capability in addressing unique client requirements.

Promoted by industry veterans Mr. Aftabhusen S Khandwawala, Mr. Varghese Joseph Pottakerry, Mr. Gurubaxsing Jamiatsing Bagga, and Mr. Sadik Nannabhai Qureshi, Kalana Ispat has shown considerable growth. The company's revenue figures over recent fiscal years are as follows:

FY24: ₹7,394.46 lakhs

FY23: ₹8,335.87 lakhs

FY22: ₹5,793.32 lakhs

FY21: ₹4,298.06 lakhs

EBITDA has improved as well, with FY24 reporting ₹365.23 lakhs compared to ₹143.67 lakhs in FY23. The profit after tax also reflects significant growth, with ₹236.70 lakhs in FY24, up from ₹50.09 lakhs in FY23.

For the Kalana Ispat IPO, the pre-issue EPS is ₹3.03 and the post-issue EPS is projected at ₹1.81. The pre-issue P/E ratio is 21.78x, and the post-issue P/E ratio stands at 36.46x, which is competitive against an industry average of 36.17x. The company's ROCE for FY24 is 21.20% and ROE is 31.12%, suggesting that the IPO is reasonably priced.

Investment Recommendation

The Grey Market Premium suggests potential listing gains of around 30%. However, while Kalana Ispat demonstrates strong financial metrics, our recommendation is to avoid this IPO for long-term investment. It may be suitable for risk-tolerant investors looking for listing gains.

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