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At the IPO price band of Rs 880-900, the offer is valued at 24.5/25 times its FY2021 EPS considering the diluted equity at the upper and lower price band.
Steel maker Shyam Metalics and Energy Ltd (SMEL) has reduced the size of its Initial Public Offer (IPO) that will hit the capital market on June 14 to 909 crore from Rs 1,107 crore.
The size was reduced after promoters decided to offload shares only worth Rs 252 crore from their own stake against Rs 452 crore as planned earlier.
One of the least leveraged integrated steel producers said it has reduced in spite of SEBI’s approval for Rs 1,107 crore initial share-sale.
“The Offer for Sale (OFS) portion had been reduced by Rs 200 crore. Earlier existing promoters had planned to offload their holding worth Rs 452 crore during this offer.
The fresh issue size remains the same at Rs 657 crore,” Shyam Metalics vice-chairman and managing director Brij Bhusan Agarwal told PTI.
Analysts indicated high valuation of metal stocks might have helped changed promoters call to reduce OFS.
The total amount that will be raised through the book-building route will be exactly the same as the promoters back in 2018 had received SEBI’s nod to raise Rs 909 crore as IPO. The only difference is the company then had planned to raise the entire amount as a fresh issue and the existing shares sale was on the radar.
OFS is a mechanism by which existing shareholders offload their shares in the public offer. An IPO can be OFS, a new issue, or a mix of both.
Post IPO promoter’s dilution will be around 12 % but the final number will depend on the issue price that will be decided later by the book builders.
“The IPO proceeds will mainly be used for general corporate purposes and working capital will be the major component,” International Relations head Pankaj Harlalka said.
The company, including its backward integration, has a total metal capacity of 5.71 million tonnes and 227 MW of captive power. The capacity will be ramped up to 11.57 million tonnes by 2025 as brownfield projects in two plants of Jamuria in West Bengal and Sambalpur in Odisha.
“The expansion cost will be from internal accrual. We are the least leveraged steel maker and will continue to remain so,” Agarwal said.
In the recent past, several big promoters had lost their steel empires due to high debt and failing to manage their leverage positions.
The company has just long-term equipment finance of Rs 182 crore and working capital of Rs 682 crore against a net worth of Rs 3,285 crore as of December 2020.
The long steel products and ferroalloy focused company sells intermediate and final products across the steel value chain to domestic and international markets