Monday, June 20, 2011

Readymade Steel India IPO

Readymade Steel India, finished steel provider, has come out with an IPO of equity shares for cash aggregating upto Rs 34.75 crore. The company is primarily in the business of providing ready to use steel for construction activities to the infrastructure industry. The company is an ISO 9001:2008 certified steel service provider and has an installed capacity of 27000 MTPA for processing of steel used in the construction industry primarily reinforcement bars into various shapes and sizes like cranked bars, stirrups, verticals, column beam cages etc.

The IPO shall open on June 27, 2011 and shall close on 29th June, 2011. The company has fixed Rs 90-108 as the price band of the IPO.

The company intends to utilize the proceeds of the IPO for partly financing the expansion of existing facility at Khopoli, district Raigad, Maharashtra and setting up of new facilities near New Delhi and Raipur; pre-operative expenses including issue expenses; and working capital requirements.

Readymade Steel India has already raised more than Rs 6.5 crore through pre-IPO placement. For the nine months period ended on December 2010, it reported profit after tax of Rs 2.32 crore on total income of Rs 84.94 crore.

Arihant Capital Markets Ltd is the book running lead manager to the issue.

Recommendation:
CARE has assigned Grade 2 to the IPO indicating below average fundamentals. Some of the recent IPOs (even those with poor fundamentals) had a good listing. However, we would not recommend Readymade Steel India IPO to investors on fundamentals basis. If the investor wants to take risk with recent upswing in IPO listings, that is his or her choice.

Subscription:
Readymade Steel India IPO has got 1.68 times subscribed, largely due to retail support.

At the close of the IPO,
QII segment got subscribed 0.03 times
NII segment got subscribed 1.37 times
Retail segment got subscribed 4.18 times

Allotment:
Click here to check Readymade Steel IPO Allotment status!

Listing:
Readymade Steel India IPO got listed on 13th July. The stock gained as much as 9% to hit an intraday high in early trade of Rs 117.75, before seeing a sharp sell-off. It plunged 38.5%, to close at Rs 66.45 a share on the BSE.