Vraj Iron and Steel Limited IPO

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The company is a prominent player in the steel manufacturing industry, specializing in the production of Sponge Iron, M.S. Billets, and TMT bars under the reputable brand, Vraj. Their commitment to quality and operational excellence has established them as a significant contributor to the steel sector in India.

Manufacturing Facilities

They operate through two state-of-the-art manufacturing plants located in Raipur and Bilaspur, Chhattisgarh. Spanning an extensive area of 52.93 acres, these plants are equipped with advanced technology and infrastructure to ensure efficient and high-quality production.

Expansion Plans

To further solidify the market position and meet increasing demand, they are undertaking significant expansion initiatives. These include:

1. Manufacturing Capacity Expansion: We are increasing the capacities of our existing manufacturing plants, which will elevate our aggregate installed capacity from 2,31,600 TPA to an impressive 5,00,100 TPA. This expansion will enable us to produce a higher volume of both intermediate and final steel products.
2. Captive Power Plant Expansion: The capacity of our captive power plant is being increased from 5 MW to 20 MW. This enhancement will ensure that our growing energy requirements are met sustainably and efficiently.

Timeline for Expansion

i. Sponge Iron and Captive Power Plant Expansion: Expected to become operational in Q4 of FY 2024-25.
ii. M.S. Billets Expansion: Expected to become operational in Q1 of FY 2025-26.

Strategic Significance

These expansions are strategically planned to align with their long-term vision of becoming a leading steel manufacturer. By increasing their production capacities and ensuring a stable power supply, they aim to enhance their operational efficiency, reduce production costs, and deliver superior quality products to their customers.

Conclusion

With their robust infrastructure, ongoing expansion projects, and a strong commitment to quality, they are well-positioned to cater to the rising demand for steel products. Their strategic initiatives will not only bolster their production capabilities but also reinforce their brand, Vraj, as a symbol of excellence and reliability in the steel industry.

Objects of the Vraj Iron and Steel Limited IPO:

The company proposes to utilise the Net Proceeds in the following manner. i. Funding for Capital Expenditure towards the "Expansion Project" at Bilaspur Plant: ii. Repayment or prepayment of borrowings from HDFC Bank obtained by the company for the capital expenditure towards the "Expansion Project" at Bilaspur Plant; and iii. Capital expenditure towards the "Expansion Project" at Bilaspur Plant. iv. General Corporate Purposes.
DRHP of Vraj Iron and Steel Limited IPO
RHP of Vraj Iron and Steel Limited IPO

Vraj Iron and Steel Limited IPO Details:

Open Date: Jun 26 2024
Close Date: Jun 28 2024
Total Shares: 8,260,870
Face Value: ₹ 10 Per Equity Share
Issue Size: 171.00 Cr.
Lot Size: 72 Shares
Issue Price: ₹ 195 - 207 Per Equity Share
Listing At: NSE,BSE
Listing Date: Jul 03 2024

Promoters And Management:

Vijay Anand Jhanwar, 43, is the Chairman and Managing Director of the Company, serving on the Board since April 7, 2012. He holds a Bachelor’s degree in Engineering from Nagpur University and has 22 years of experience. He has held various significant roles including General Secretary, President, and Co-Chairman of Chhattisgarh Sponge Iron Manufacturers Association, and expert member of the Steel Consumer Council of India. He also serves on the Chhattisgarh State Council for Science and Technology. Vijay is a director in multiple companies including Utkal Ispat, Gopal Sponge and Power, and Vraj Metaliks. Prasant Kumar Mohta is a Whole-Time Director of the Company. He has been on the Board of Directors of the Company since August 26, 2013. He holds a Bachelor’s degree in Commerce from Utkal University. He has worked as a Senior Accountant in Utkal Ispat Private Limited. Further, he looks after the accounts and finance of the Company and other statutory compliances. He has approximately 20 years of experience. Praveen Somani is a Whole-Time Director of the Company. He has been associated with the Company as a Director since September 7, 2021. He does not have any specific qualification and does not hold any Bachelor/Masters or any professional degree. He joined the Company in 2012 as General Manager of the Bilaspur Plant. He is also acting as a Factory head of Bilaspur Plant and is responsible for all the day to day work of the Bilaspur Plant. He has approximately 11 years of experience.

Financials of Vraj Iron and Steel Limited IPO:

Particulars ( In Crore )
2021
2022
2023
9M-FY24
Revenue from Operations 291 414 516 301
Other Income 0.2 0.3 2 3
Total Revenue 291 414 517 305
Cost of materials consumed 213 314 375 205
Purchases of stock-in-trade 2 5 6 3
Changes in inventories 3 -1 1 -10
Employees Benefit Expenses 6 7 7 6
Other Expenses 39 41 49 39
EBITDA 28 48 78 62
OPM (%) 9.51% 11.66% 15.16% 20.35%
Depreciation & Amortisation 7 7 6 4
EBIT 20 41 72 58
Finance Cost 6 4 3 2
PBT 16 39 72 59
Tax 5 10 18 14
PAT 11 29 54 45
NPM (%) 3.78% 6.93% 10.44% 14.63%
No.of Shares 3.29 3.29 3.29 3.29
EPS 3.33 8.70 16.37 13.51

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Vraj Iron and Steel Limited 516 54 16.37 12.6 207 683
Sarda Energy and Minerals Limited 4,212 604 17.09 15.5 231 8,133
Godawari Power and Ispat Limited 5,745 793 56.29 16.3 1,125 15,299
Shyam Metalics and Energy Limited 12,610 848 33.62 17.6 649 18,113
* All the data is as per FY23.

Recommendation on Vraj Iron and Steel Limited IPO:

1. The company, operating under the brand Vraj, is a significant player in the steel manufacturing industry, specializing in the production of Sponge Iron, M.S. Billets, and TMT bars. 2. Product Portfolio Their product range includes: i. Sponge Iron                         ii. TMT Bars                             iii. MS Billets iv. By-products: Dolochar, Pellet, and Pig Iron These products serve a diverse customer base comprising industrial clients and end-users. Their distribution strategy involves direct sales and partnerships with brokers and dealers to ensure broad market reach. 3. Distribution Channel Their company operates under a B2BN (Business-to-Business Network) model. Their sales and marketing team focuses on nurturing relationships with existing customers, securing new orders, identifying potential customers, and creating business opportunities. The core objective is to build long-lasting customer relationships through strategic alignment, ensuring consistent orders and smooth business operations. They utilize agents on a commission basis to facilitate the sale of TMT Bars, Sponge Iron, and MS Billets. 4. Competition They operate in a highly competitive steel industry, particularly within Chhattisgarh, a hub for iron and steel manufacturing in India. Their key competitors include prominent domestic and multinational companies such as: i. Tata Steel Limited                                                ii. JSW Steel Limited iii. Steel Authority of India Limited (SAIL)           iv. Jindal Steel and Power Limited (JSPL) v. Godawari Power and ISPAT Limited (GPIL)    vi. ESL Steel Limited (ESL) vii. Sarda Energy & Minerals Limited (SEML)    viii. Shyam Metalics and Energy Limited (SMEL) These companies, along with their firm, vie for market share in the robust and dynamic Indian steel market. 5. The Revenue has Increased from Rs.291 Crores in FY21 to Rs.516 Crores in FY23. 6. The EBITDA has Increased from 28 Crores in FY21 to 78 Crores in FY23. 7. The PAT has Increased from 11 Crores in FY21 to 54 Crores in FY23. 8. As per FY23, CFO/EBITDA is 0.97, As per FY24, EPS is 18.02, 9. Market Capitalization is 683 Crores & P/E is 11.5x based on FY24.

Lead Manager of Vraj Iron and Steel Limited IPO:

  1. Aryaman Financial Services Limited

Registrar of Vraj Iron and Steel Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Vraj Iron and Steel Limited First Floor, Plot No 63 & 66, Ph No 113 Mother Teresa Ward No. 43 3, Jalvihar Colony, Raipur-492001 Phone: +91-771-4059002 Email: info@vrajtmt.in Website: https://www.vrajtmt.in/

Discussion on Vraj Iron and Steel Limited IPO:

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