The Rajputana Stainless IPO will open for public subscription on March 9. The issue will close on March 11. The company plans to raise Rs. 254.98 crore through this public issue.
The price band for the Rajputana Stainless IPO is set at Rs. 116 to Rs. 122 per share. The issue follows the book building process. Shares may list on the stock exchanges on March 16. Share allotment is expected on March 12.
The IPO includes a fresh issue of 1.46 crore shares. It also includes an offer for sale of 62.5 lakh shares. Through the fresh issue, the company plans to raise about Rs. 178.73 crore.
Rajputana Stainless plans to use this money to expand its manufacturing unit in Panchmahal, Gujarat. The company will also use part of the funds to repay some borrowings and for general corporate purposes.
Nirbhay Capital Services Private Limited is the book running lead manager for the issue. KFin Technologies Limited is the registrar.
Rajputana Stainless makes long and flat stainless steel products. These products serve industries such as automotive, oil and gas, engineering, and construction. The company sells most of its products in India.
However, the company’s Red Herring Prospectus lists several RHP risks that investors should understand before making an IPO investment.
One important risk is customer concentration. The company earns a large share of revenue from its top ten customers. Many of these customers do not have long term contracts. If any major customer stops buying, revenue may fall.
Another risk comes from regional sales. A large part of domestic revenue comes from Maharashtra, Gujarat, and Uttar Pradesh. Any slowdown in these regions may affect the company’s business.
Supplier dependence also creates risk. The company depends on a small group of suppliers for raw materials and work-in-progress goods. Any delay or shortage may affect production.
The company also reports contingent liabilities of Rs. 120.82 crore. This amount equals about 68% of its net worth. If these liabilities arise in the future, financial pressure may increase.
The stainless steel industry also works on a high-volume and low-margin model. This means profit margins remain small. Rising costs may reduce profits.
Another concern is operational risk. Rajputana Stainless currently runs only one manufacturing facility in Gujarat. Any problem at this plant may affect production and sales.
The company also reported negative cash flow from investing and financing activities in recent years. This trend may continue if spending increases.
Competition in the steel sector is also strong. Many large and established companies operate in this industry. A highly competitive market may limit growth.
The steel industry also moves in cycles. Prices often change based on demand, supply, and global economic conditions. These changes may affect revenue and profits.
Inflation is another factor. Rising costs of raw materials, wages, and other expenses may affect profitability if the company cannot increase prices.
Grey market activity also looks weak for the IPO. Market sources say the grey market premium currently stands at zero. This suggests the stock may list near the issue price. Because of these IPO risks, careful research remains important before applying for the Rajputana Stainless IPO.
Also Read: Jio IPO Hits Regulatory Roadblock, Reliance’s Mega Listing Delayed