Shree Hare-Krishna Sponge Iron Limited, a Chhattisgarh-based manufacturer of Sponge Iron, has opened its Initial Public Offering (IPO) on the NSE SME platform. This IPO offers an investment opportunity in the raw material side of steel production, catering to electric arc and induction furnace steelmakers across selected regions in India.

The IPO is a Book Built Issue amounting to ₹29.13 Crores, consisting entirely of a fresh issue of 50.70 lakh equity shares. The subscription period runs from June 24 to June 26, 2025, with listing scheduled for July 1, 2025.

The price band for the issue is set at ₹56 to ₹59 per share, and at the upper band, the market capitalisation of the company is projected to be ₹113.22 Crores.

The lot size is 2,000 shares, translating to a minimum investment of ₹1,18,000 for retail investors. High-Net-Worth Individuals (HNIs) need to apply for at least 2 lots (₹2,36,000).

The IPO is managed by HEM SECURITIES LIMITED, while KFIN TECHNOLOGIES LIMITED is the registrar, and Hem Finlease Private Limited serves as the market maker.

Company Overview

Shree Hare-Krishna Sponge Iron is engaged in the manufacturing and sale of sponge iron, a critical raw material in steelmaking. The company supplies to regional steel manufacturers, supporting electric arc furnace and induction furnace operations.

Sponge iron plays a significant role in India's steel sector, especially in secondary steel production, and is considered an energy-efficient alternative to traditional blast furnaces.

The company is promoted by a seasoned leadership team:

• Manoj Parasrampuria: Over 36 years of experience in steel and metal sectors

• Anubhav Parsrampuria: Around 7 years of experience

• Manish Parasrampuria: Approximately 32 years of experience

Their collective industry experience and operational depth have helped the company establish and maintain a steady market presence.

Financial Performance

Shree Hare-Krishna Sponge Iron has shown moderate financial growth in recent years. The last three fiscal years recorded the following performance:

• Revenue from operations:

  • FY23: ₹9,524.95 Lakh

  • FY24: ₹8,493.13 Lakh

  • FY25: ₹8,360.02 Lakh

• EBITDA:

  • FY23: ₹1,507.96 Lakh

  • FY24: ₹1,491.03 Lakh

  • FY25: ₹1,399.48 Lakh

• Profit After Tax (PAT):

  • FY23: ₹1,052.23 Lakh

  • FY24: ₹1,017.44 Lakh

  • FY25: ₹919.80 Lakh

While the revenue trend shows a decline year-on-year, the company has managed to maintain profitability and sustain EBITDA margins, which may indicate cost control or operational efficiencies.

Valuation Metrics and Key Ratios

• Pre-issue EPS (FY24): ₹6.51

• Post-issue EPS (FY24): ₹4.79

• Pre-issue P/E Ratio: 9.06x

• Post-issue P/E Ratio: 12.31x

• Industry Average P/E: 24x

• Return on Capital Employed (ROCE): 14.70%

• Return on Equity (ROE): 13.33%

• Return on Net Worth (RoNW): 12.51%

These figures suggest that the IPO is moderately priced, offering an entry point that is below industry average P/E, which may be attractive to long-term investors looking for value-based picks.

Use of Proceeds

The company plans to utilise the net proceeds from the IPO for:

1. Capital Expenditure of ₹2,300.00 Lakhs to set up a Captive Power Plant at Siltara, Raipur. This move is expected to improve self-reliance, reduce power costs, and support manufacturing scalability.

2. General corporate purposes, including administrative expansion, working capital, and potential debt management.

The captive power initiative is a strategic investment that could enhance profitability in the medium term, especially in energy-intensive industries like sponge iron production.

Grey Market Premium and Market Sentiment

As of June 24, 2025, the Grey Market Premium (GMP) stands at ₹0, showing no immediate expectation for listing gains. This may be due to:

• Subdued steel market sentiment

• High issue size for an SME listing

• Decline in recent financial top-line figures

However, GMP is an unofficial and volatile metric, and should not be the sole basis for investment decisions.

Subscription Status

As of 11:00 AM on June 24, 2025, the IPO has been subscribed 0.04 times. This low initial interest reflects:

• A relatively high ticket size for retail investors

• Limited public awareness of the brand

• Absence of speculative GMP activity

Final day momentum will be key to determining the issue's success.

Anchor Investment

The company has successfully raised ₹8.49 Crores from Anchor Investors at ₹59 per share, allocating 14.40 lakh shares. The presence of anchor investment indicates institutional confidence, though it hasn’t significantly boosted public interest so far.

Allotment and Listing Process

The allotment date is June 27, 2025, and investors can check their allotment status on the KFIN Technologies Limited portal by entering their PAN, application number, or DP ID.

The stock will debut on the NSE SME platform on July 1, 2025. Post-listing liquidity may be limited due to low trading volumes typical of SME exchanges.

Expert Review and Recommendation

Shree Hare-Krishna Sponge Iron offers a fundamentally stable investment, backed by:

• Consistent profits over 3 years

• Fair valuation (P/E lower than industry average)

• Focused capital expansion strategy (captive power plant)

However, concerns include:

• Declining revenue trend

• No GMP, indicating no buzz in speculative circles

• Low early subscription rates

For long-term investors with risk tolerance and belief in the steel and infrastructure sector's growth, this IPO may present a value opportunity.

For short-term investors or those looking for listing gains, the lack of GMP and subdued response may be a red flag.

Recommendation: Avoid for listing gains. Consider for long-term only after final-day subscription figures improve.

Conclusion

The Shree Hare-Krishna Sponge Iron IPO is a moderately priced, sector-focused offering, with a business model tied to India’s core infrastructure and manufacturing demand. While its financials are consistent and expansion plans are growth-oriented, current market sentiment doesn’t reflect bullish interest in the IPO.

Investors should track final subscription numbers closely before making a decision. Those seeking safe, quick returns may want to look elsewhere, while sector-focused long-term investors might consider entry if confidence picks up during the final subscription phase.

Disclaimer: This article is intended for educational and informational purposes only. It does not constitute investment advice. Please consult a certified financial advisor before making any investment decision. Investing in capital markets involves risk. Read all offer documents carefully before investing.

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The Current active IPO are  Abram Food, Shri Hare-Krishna Sponge Iron, Icon Facilitators, Globe Civil Projects, Ellenbarrie Indutrial Gases, Kalpataru,AJC Jewel, Aakaar Medical Technologies, Safe Enterprises Retail Fixtures, Mayasheel Ventures.

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