The Indian stock market is gearing up for an exciting new listing as Newmalayalam Steel prepares to launch its Initial Public Offering (IPO). A key player in the steel manufacturing industry, Newmalayalam Steel has garnered attention for its high-quality steel products and its solid reputation in the market. With a commitment to meeting the growing demand for steel in construction, infrastructure and industrial sectors, the company is set to expand its operations and further strengthen its position in the industry.
The steel industry in India is experiencing rapid growth, driven by increased demand from urbanization, infrastructure development and industrial production. Newmalayalam Steel, with its robust production capacity and strategic vision is well-positioned to capitalize on these trends. The funds raised from this IPO are expected to fuel its expansion plans, enhance technological capabilities, and improve overall operational efficiency.
This article will examine the essential details of the Newmalayalam Steel IPO, including its business model, market outlook, investment potential and whether it is a worthwhile investment opportunity.
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Table of Contents
Newmalayalam Steel IPO Details
Newmalayalam Steel IPO is a book-built issue of ₹41.76 crore and it’s entirely a fresh issue which means proceeds from the issue will go to the company to strengthen it.
Newmalayalam Steel’s ₹41.76 crore IPO opens for subscription on Thursday, December 19, 2024 and will close on Monday, December 23, 2024. The allotment for the Newmalayalam Steel IPO is expected to be finalized on Tuesday, December 24, 2024, after which the company will be listed on NSE SME with the tentative listing date set for Friday, December 27, 2024. The price band for Newmalayalam Steel shares has been fixed at ₹85 to ₹90 per share.
| IPO Name | Newmalayalam Steel Limited |
| IPO Open Date | 19 December 2024 |
| IPO Close Date | 23 December 2024 |
| Price Band | ₹85 to ₹90 per share |
| Lot Size | 1,600 shares |
| Face Value | ₹10 per share |
| Total-Issue Size | 46,40,000 shares (aggregating up to ₹41.76 Cr) |
| Fresh Issue | 46,40,000 shares (aggregating up to ₹41.76 Cr) |
| Share Holding Pre Issue | 1,26,47,600 shares |
| Share Holding Post Issue | 1,72,87,600 shares |
| Share Allotment Date | 24 December 2024 |
| Initiation of Refund | 26 December 2024 |
| Credit of Shares to Demat | 26 December 2024 |
| Listing Date | 27 December 2024 |
| UPI Cut Off Time | 23 December 2024 – 5 P.M. |
| Listing Exchange Name | NSE SME |
| Lead Manager(s) of Issue | Khandwala Securities Limited |
| Registrar of Issue | Kfin Technologies Limited |
| Market Maker Portion | 2,33,600 shares Aftertrade Broking Private Limited |
For detailed information, you can refer to Newmalayalam Steel IPO RHP.
Newmalayalam Steel IPO GMP
Before the opening, the IPO has received a weak response in the unlisted market, where it is currently trading at almost no premium. The latest Grey Market Premium (GMP) is ₹0 today.
Check IPO Live GMP: View now for Real-Time Updates
Newmalayalam Steel IPO Lot Size
Newmalayalam Steel Limited company has issued 46,40,000 shares worth ₹41.76 crore for the fresh issue. The minimum lot size for an application is 1 lot (1,600 shares). The minimum amount of investment required by retail investors is ₹1,44,000.
The minimum lot size investment for HNI (High Net Worth Individual) is 2 lots (3,200 shares), amounting to ₹2,88,000.
| Category | Lots | Shares | Amount |
|---|---|---|---|
| Retail(Min) | 1 | 1,600 | ₹1,44,000 |
| Retail(Max) | 1 | 1,600 | ₹1,44,000 |
| HNI(Min) | 2 | 3,200 | ₹2,88,000 |
Newmalayalam Steel IPO Reservation Details
Below are the limits for the shares offered in the different investor categories for this IPO:
| Investor Category | Shares Offered |
| QIB Shares Offered | Not more than 10.02% of the Net Issue |
| Retail Shares Offered | Not less than 45.03% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 44.95% of the Net Issue |
About the Company
So, that concludes the details of the Newmalayalam Steel IPO. Now, let’s shift our focus to explore more about the company’s background, operations, strengths and risks, financial statements and key highlights.
Newmalayalam Steel Limited (NSL) was incorporated in 2017, for taking over the entire business of M/s. Demac Steel along with its assets and liabilities in entirety, on a going concern basis (the “Transfer”). The Company entered into an agreement to sell business undertaking executed dated August 7, 2017 with M/s. Demac Steel and undertook the transfer of the assets and liabilities as per the agreed terms.
Newmalayalam Steel is a steel manufacturing company involved in supplying & trading alloy steel, stainless steel and other related products. In 2018, Newmalayalam Steel expanded its operations by setting up an electric resistance welding (ERW) tube mill with a production capacity of 3,500 MT at its manufacturing facility in Thrissur, Kerala. This strategic move enabled the company to start producing galvanized pipes, tubes and sheets, which have become staples in Kerala households. These galvanized products serve a crucial role in roofing, offering benefits like heat reduction and leak prevention.
In 2019, to meet the growing demand and strengthen its market presence, the company expanded its manufacturing capacity by adding another electric resistance welding (ERW) tube mill with an installed capacity of 4,000 MT at its production facility.
The company’s clients are Jaihind Steel Private Limited, Aashico Ventures LLP, George Infra Private Limited and others. The products’ reputation and quality have helped Newmalayalam Steel Limited establish brand equity in the products marketed under the brand name “Demac Steel“. As of 30 September 2024, the company had 140 full-time employees.
Marketing Strategy:
Newmalayalam Steel implements a comprehensive marketing and branding strategy for its products. The company promotes its offerings through various channels including:
- Shop Branding
- Bus advertisements
- Advertisements at metro stations
- Hoardings displays
- Newspaper advertisements
Competitive Strengths:
- Widespread distribution network and presence across various retail channels.
- Diversified Product Basket, brand recall and established track record.
- Existing client and supplier relationships.
- Quality Assurance and Quality Control of the products.
- Strategically located manufacturing facilities with modern infrastructure and integrated manufacturing facilities with a core focus on quality.
- Cost-efficient sourcing and locational advantage.
Objectives of Newmalayalam Steel IPO
The company proposes to utilize the net proceeds from the offer towards the following objectives:
- IT/Technological Upgradation of the existing manufacturing facility.
- Expansion of the existing solar facility for power generation.
- Funding of expenditure towards civil construction of new factory shed cum storage facility within the existing factory premises situated at Kerala.
- Advertising, Marketing and Brand Building.
- Funding incremental working capital requirements of the company.
- Issue-related expenses and general corporate purposes.
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Newmalayalam Steel Limited Financial Information (Restated)
Newmalayalam Steel’s revenue decreased by 15.78% and profit after tax (PAT) dropped by 28.91% in FY2023-24 (April 1, 2023 to March 31, 2024).
| Period Ended | 31 Mar 2022 | 31 Mar 2023 | 31 Mar 2024 | 30 Sep 2024 |
| Assets | 9,001.66 | 8,734.83 | 11,208.19 | 11,032.77 |
| Revenue | 32,360.91 | 35,995.71 | 30,314.80 | 15,533.82 |
| Profit after Tax | 673.06 | 600.49 | 426.86 | 519.30 |
| Net Worth | 3,019.79 | 3,620.28 | 4,047.14 | 4,566.44 |
| Reserves & Surplus | 1,755.03 | 2,355.52 | 2,782.38 | 3,301.68 |
| Total Debt | 4,920.06 | 2,815.22 | 5,911.15 | 3,917.94 |
| Amt in ₹ Lakhs | ||||
Key Performance Indicators
The current market capitalization of the Newmalayalam Steel Limited stands at ₹155.59 crore. As of March 31, 2024, the company’s key performance indicators (KPIs) include an impressive ROCE and PAT margin (%) of 17.60% and 1.41% respectively.
| Key Performance Indicators | Value |
|---|---|
| ROE | 10.55% |
| ROCE | 17.60% |
| RoNW | 10.55% |
| Price to Book Value | 2.81 |
| PAT Margin | 1.41% |
The EPS and PE ratios before and after the Newmalayalam Steel IPO issue are detailed in the list below:
| Ratios | Pre IPO | Post IPO |
| EPS (₹) | 3.38 | 6.01 |
| P/E (x) | 26.67 | 14.98 |
- The Pre-IPO EPS is calculated based on pre-issue shareholding as of the date of RHP and the latest FY earnings as of March 31, 2024, that is available in RHP.
- The Post-IPO EPS is calculated based on the post-issue shareholding and annualized FY earnings of September 30, 2024, that are available in RHP.
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Newmalayalam Steel IPO Review (May Apply)
The review of Newmalayalam Steel IPO has been done based on the following points:
- Revenue Growth: There has been a significant decline in the revenue over the past three years: ₹32,360.91 lakhs (2022) → ₹35,995.71 lakhs (2023) → ₹30,314.80 lakhs (2024).
- Profit Growth: The Profit after tax (PAT) has decreased from ₹673.06 lakhs (2022) to ₹426.86 lakhs (2024). With a PAT margin of 1.41%, the company demonstrates low profitability. However, in H1 FY25, the profit after tax has come to around ₹519.30 lakhs which shows strong profit growth in 6 months against the previous trend.
- Strong Reserves: Reserves have grown from ₹1,755.03 lakhs (2022) to ₹2,782.38 lakhs (2024), indicating the company’s ability to reinvest for business expansion.
- Valuation Metrics: Pre-IPO P/E: 26.67 | Post-IPO P/E: 14.98
As per the RHP document, the company has shown Apollo Pipes and Hariom Pipe Industries as their listed peers. They are trading at a P/E of 49.4 and 29.2 (as of December 15, 2024). However, they are not truly comparable on an apple-to-apple basis. The PE ratio for the steel sector is around 20x, making the IPO appear reasonably valued in comparison to the sector.
- Return on Capital Employed (ROCE) and Return on Net Worth (RoNW):
ROCE: 17.60% reflects the company’s capital efficiency.
RoNW: 10.55% is average for long-term investors.
- GMP and IPO Price Band: With a price range of ₹85 – ₹90 and a GMP of ₹0, the market shows limited interest in this IPO.
Strengths
- Established Manufacturing Expertise: Newmalayalam Steel Limited has established itself as a reliable player in the steel industry, manufacturing high-quality galvanized pipes, tubes and sheets. The company has gained significant brand equity under its “Demac Steel” brand, which is well-recognized in Kerala and other regions.
- Strategic Location and Modern Infrastructure: The company operates a strategically located manufacturing facility in Kerala with integrated infrastructure, enabling efficient production. The unit’s proximity to local markets and cost-effective sourcing adds to its competitive edge.
- Diversified Product Portfolio: Newmalayalam Steel boasts a diversified product basket catering to various customer needs including construction, infrastructure and industrial applications. This diversification helps mitigate risks associated with demand fluctuations.
- Widespread Distribution Network: The company has built a strong distribution network, reaching contractors, retailers and wholesalers. Its promoter group entity Jaihind Steel Private Limited further strengthens its market reach.
- Focus on Sustainability: Newmalayalam Steel has invested in solar power generation to reduce energy costs and enhance sustainability. This reflects the company’s commitment to adopting environmentally friendly practices.
- Strong Financial Position: Despite a slight decline in revenue and profitability in FY2024, the company has demonstrated financial stability supported by a healthy net worth and reserves.
Risks
Here are some of the risk factors involved in the IPO that investors should know before subscribing to the issue:
- Market Competition: Operating in a highly competitive steel manufacturing sector.
- Revenue Decline: Recent revenue and PAT decline in FY2024 raise concerns about growth sustainability.
- Sector Dependency: Heavy reliance on construction and infrastructure industries for demand.
All the above-mentioned risks should be considered by investors before deciding to invest in the IPO.
Opinion
Considering the company’s average financial growth, fundamentals and moderate potential for listing gains, the IPO appears to be satisfactory. As a result, the opinion leans towards avoiding the IPO for the short term, though it may be considered for long-term gains. Additionally, as the IPO is from the SME sector, which typically carries higher risks, the following points should be kept in mind:
- For Long-Term Investors: Based on its projected performance for FY25, the issue seems reasonably priced. Investors might consider holding their investments for the medium to long term.
- For Short-Term Investors: Attention should be given to the GMP trend on the listing day, as any potential short-term gains currently appear unlikely, with a 0% return on the listing date.
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Additional Details
Promoter Holding
Mr. Vazhappily Davis Varghese, Mr. Divyakumar Jain, Mr. Ankur Jain, Mr. Mahendra Kumar Jain, Ms. Molly Varghese and Mr. Cyriac Varghese are the promoters of the company. Their shareholding before and after the issue is as follows:
| Pre Issue Shareholding | 99.80% |
| Post Issue Shareholding | 73.02% |
Newmalayalam Steel IPO Allotment Status: Check Now
Newmalayalam Steel Limited Contact Details
Address: Door No. 2/546/A & 2/546/B Mala, Pallipuram P O, Mala, Thrissur, , Kerala – 680732
Phone: +91 7034212002
Email: [email protected]
Website: https://demacsteel.com/
Newmalayalam Steel IPO Registrar Details
Registrar: Kfin Technologies Limited
Address: KFintech, Tower-B, Plot No 31 & 32, Financial District, Nanakramguda, Gachibowli, Hyderabad, Telangana – 500032
Phone: 04067162222, 04079611000
Website: https://kosmic.kfintech.com/ipostatus/
Disclaimer: This article is written solely for educational purposes and should not be interpreted as investment advice or recommendations. The stock market involves significant risks, so we encourage you to seek guidance from a financial advisor before making any investment decisions.
FAQs
Q1. What is Newmalayalam Steel IPO?
Newmalayalam Steel is an SME IPO of 46,40,000 fresh equity shares. The company aims to raise ₹41.76 crore through this IPO.
Q2. What is the price band of Newmalayalam Steel IPO?
The price band of Newmalayalam Steel IPO has been set at ₹85 to ₹90 per share. This price range presents a good opportunity for investors.
Q3. What are the important dates for Newmalayalam Steel‘s IPO?
The IPO opens on December 19, 2024, and closes on December 23, 2024. The listing of shares will take place on December 27, 2024 on NSE SME.
Q4. How many shares are being offered in the Newmalayalam Steel IPO?
A total of 46,40,000 shares are being offered in the Newmalayalam Steel IPO. These shares are entirely part of the fresh issue.
Q5. What is the lot size of Newmalayalam Steel IPO?
The lot size of the Newmalayalam Steel IPO is 1600 shares.
Q6. What is the expected listing gain for Newmalayalam Steel IPO?
The Grey Market Premium (GMP) of Newmalayalam Steel IPO is showing ₹0 as of now.
Q7. Who is the lead manager of Newmalayalam Steel IPO?
The lead manager of Newmalayalam Steel IPO is Khandwala Securities Limited.
Q8. How to apply for the Newmalayalam Steel IPO?
You can apply for the Newmalayalam Steel IPO online through ASBA via your bank account. Alternatively, you can apply via UPI through your stockbroker or submit an offline application form through your broker. The deadline for submitting IPO applications is December 23, 2024.
Q9. How to apply for the Newmalayalam Steel IPO through Angel One?
To apply for the Newmalayalam Steel IPO through Angle One first Log in to the Angel One application with your credentials. Select the IPO. You will see the IPO Name “Newmalayalam Steel IPO”. Click on the Bid button. Confirm your Application. Now go to your UPI app or Net Banking or BHIM app to approve the mandate.
Q10. How to apply for the Newmalayalam Steel IPO through 5 Paisa?
To apply for the Newmalayalam Steel IPO through 5 Paisa, first log in to the 5 Paisa application with your credentials. Select the IPO. You will see the IPO Name “Newmalayalam Steel IPO”. Click on the Bid button. Confirm your Application. Now go to your UPI app or Net Banking or BHIM app to approve the mandate.
Q11. How to apply for the Newmalayalam Steel IPO through Upstox?
To apply using Upstox, first log in to the Upstox application with your credentials. Select the IPO. You will see the IPO Name “Newmalayalam Steel IPO”. Click on the Bid button. Confirm your Application. Now go to your UPI app or Net Banking or BHIM app to approve the mandate.
Q12. How to apply for the Newmalayalam Steel IPO through IIFL?
Log in to the IIFL application with your credentials. Select the IPO. You will see the IPO Name “Newmalayalam Steel IPO”. Click on the Bid button. Confirm your Application. Now go to your UPI app or Net Banking or BHIM app to approve the mandate.
