Kolkata: This year is supposed to witness a number of IPOs in the steel sector. Information so far reveals that at least 10 companies are eager to raise a cumulative amount of about Rs 7,000 crore in the nest eight-ten months. Supported by rising demand, infrastructure spending, and government policies, companies are focusing on capacity expansion, debt reduction and bolstering their balance sheets.
India’s steel sector is poised to once again create a stir in the primary market. At least 10 steel and steel-related companies are planning to raise approximately Rs 7,000 crore through the primary market over the eight to ten months. Investment bankers indicate that several companies have already filed DRHP (draft red herring prospectus), while others are dotting the i’s and crossing the t’s. Experts point out that the steel sector is graduating from a commodity business, driven by long-term growth play linked to infrastructure and urban development.
Companies in the fray
Several MSMEs are preparing to tap the market. They are all ending major opportunity in the government policy of focus on infrastructure. The other tailwind is the force of rapid urbanisation, which consumes iron and steel in a major way like any rapidly growing big economy. Let’s have a look at which companies are preparing to step into the market. The government is continuously focussing on upgrading infrastructure such as roads, railways, ports etc. The production-linked incentive (PLI) scheme and emphasis on capex have also boosted the steel sector. Reports say about 25-30% of total steel demand is attributable to government projects.
* Steel Infra Solutions Company Limited
* German Green Steel & Power Limited
* Rajputana Stainless Limited
* Bombay Coated Steel Limited
* A-One Steels India Limited
* Jindal Supreme (India) Limited
* Madhur Iron and Steel Limited
* Synergy Advanced Metals Limited
Deployment of funds
The funds raised from the public issues will be used to build new greenfield units, galvanising units, color-coating facilities. The money will also be used to increase stainless steel production capacity. Another priority area is often trimming debt and restoring the health of balance sheets. After deleveraging over the past decade, some iron and steel companies now want to take advantage of favorable equity markets to improve their financial health.
However, there are some downsides too. The steel sector faces price volatility, coking coal costs, import competition, and fluctuations in global demand. Therefore, companies with strong balance sheets, disciplined capital allocation, and improved export competitiveness will can command greater investor confidence.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, InvITs and any form of alternative investment instruments and crypto assets.)
