What are the reasons fuelling grey market sentiments towards Vraj Iron and Steel IPO?

Vraj Iron and Steel IPO: Market Sentiment Fueled by Robust Demand and Expansion Plans

The initial public offering (IPO) of Vraj Iron and Steel has garnered significant interest from primary market investors, reflecting confidence in the company’s growth prospects. The IPO, which opened on June 26th and closes today, has received bids exceeding the number of shares available, indicating a strong appetite for the issue.

Grey Market Premium (GMP) and Subscription Status

The grey market premium (GMP) for Vraj Iron and Steel shares stands at ₹90, indicating a positive sentiment towards the IPO. This premium is ₹4 higher than the GMP of ₹86 recorded on Thursday. The strong subscription status and the positive market trend have contributed to the bullish sentiment surrounding Vraj Iron and Steel’s IPO.

As of 10:42 AM on day 3 of bidding, the IPO was subscribed 24.43 times. The retail portion was booked 25.51 times, the non-institutional investor (NII) segment was filled 53.25 times, and the qualified institutional buyer (QIB) portion was subscribed 0.92 times.

Strong Financial Performance and Expansion Plans

Vraj Iron and Steel has demonstrated a strong financial performance over the past three years, with revenue, EBITDA, and PAT growing by 21%, 41%, and 69% CAGR respectively. The company’s strategic location and focus on value-added products have contributed to its growth.

To further enhance its growth trajectory, Vraj Iron and Steel plans to expand its production capacity. The company is investing in a project at its Bilaspur plant that aims to increase its aggregate installed capacity from 2,31,600 tons per annum to 5,00,000 tons per annum. This expansion is expected to drive improved margins and operational control.

Analyst Recommendations and Advice

Several analysts have given a “subscribe” rating for Vraj Iron and Steel’s IPO. They highlight the company’s strong financial track record, growth potential, and reasonable valuation. They believe that the IPO offers an opportunity for long-term investors to participate in the growth of the steel industry.

While GMP can provide an indication of market sentiment, experts advise against placing excessive reliance on it for investment decisions. Investors should consider the fundamentals of the company, its financials, and the overall market conditions before making a decision.