Vraj Iron & Steel shares hit upper circuit after listing; should you book profits or hold?

Vraj Iron & Steel had a decent debut at the bourses on Wednesday, listing at Rs 240 apiece, about 15.94 per cent higher on both BSE and NSE. Despite falling short on the listing gain expectations, the stock saw some follow-up buying and hit an upper circuit limit for the day, at Rs 251.95, taking the overall gains to 21.7 per cent over the issue price.
 

The stock has been listed in the 'T' category, which means that the circuit limit for the first 10 sessions has been fixed at 5 per cent only. Only intraday buying and selling is not allowed at the counter. One has to take delivery of the stock in account to sell it later.
 

Analysts have a mixed view on the stock. Some suggest that the stock has more upside steam left and is seen as a long-term term bet by the experts. However, a few analysts suggest investors to book profit in the stock citing rich valuations.
 

Vraj Iron & Steel has debuted at Rs 240, about 16 per cent above its issue price, which is seen as a good listing. The company's financial performance paints a positive picture. It has a proven track record of consistent profitability over the past three years, demonstrating its ability to generate healthy returns, said Shivani Nyati, Head of Wealth, Swastika Investmart.
 

"However, investors should acknowledge certain risks, such as the concentration of manufacturing facilities in a single region and the lack of long-term customer contracts. The valuation appears reasonable. Considering these factors and the current market sentiment, we maintain a buying rating of stop loss Rs 240 for the target of above Rs 300," she added.
 

The IPO of Vraj Iron and Steel was sold in the price band of Rs 195-207 per share with a lot size of 72 shares. The issue was open for bidding between bidding June 26 and June 28. The Raipur-based company raised 171 crore via its primary offering, which entirely included a fresh share sale of Rs 82,60,870 equity shares.
 

The issue was overall subscribed a stellar 119.04 times. The quota for qualified institutional bidders (QIBs) was booked a stellar 163.90 times The quota for non-institutional investors was subscribed 208.81 times. The portions reserved for retail investors saw bidding for 54.93 times during the three-day bidding process.
 

After receiving an overwhelming response to the issue, shares of Vraj Iron and Steel made a decent debut on the bourses with a premium of 16 per cent over the issue price  We anticipate robust performance from the steel industry in the future, said Parth Shah, Research analyst at StoxBox
 

"The company is aiming to be a cost-efficient steel manufacturer and penetrate deeper into the regional market to capture a higher share of the existing market. We, therefore, have a positive view on the company and advise the participants who have been allocated with the issue to hold the shares from a medium to long term perspective," he said.
 

Vraj Iron and Steel, incorporated in June 2004, manufactures Sponge Iron, MS Billets, and TMT bars under the brand Vraj. The company's product portfolio comprises offerings such as Sponge Irons, TMT Bars, MS Billets, and by-products Dolochar, Pellets, and Pig Iron, which cater to a mix of industrial customers and end-users.
 

Vraj Iron and Steel made a positive start at the exchanges. It uses its in-house power plants to manage costs effectively. It has shown positive results thus far, and is optimistic about continuing the current trends after expanding, said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
 

"It is rapidly expanding to keep up with the growing demand for its goods. All expansion plans should be operational starting in the first quarter of FY26. Post listing, investors should book profits, and we advise investors to stay away from long-term investment in this stock. However, in the shorter term, it might outperform the markets," he said.
 

During the IPO process, brokerage firms were mostly positive on the issue, suggesting investors to subscribe to it. Aryaman Financial Services was the book running lead manager of the Vraj Iron and Steel IPO, while Bigshare Services served as the registrar for the issue.

 

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.