Should You Consider Investing in Newmalayalam Steel IPO?

Newmalayalam Steel Limited is launching its Initial Public Offering (IPO) with a total issue size of ₹41.76 crores, consisting entirely of a fresh issue of 46.40 lakh shares. Newmalayalam Steel IPO aims to raise funds to expand its manufacturing capacity, upgrade technology, and strengthen its market position while listing on the NSE SME platform.

Newmalayalam Steel IPO will open for subscription on December 19, 2024, and close on December 23, 2024. Post-allotment, the company’s shares are expected to list on Friday, December 27, 2024. This IPO provides an opportunity to invest in a growing company with a strong focus on quality manufacturing and brand recall in the steel industry.

Why Should You Consider Investing in Newmalayalam Steel IPO?

• Established Manufacturing Expertise: Newmalayalam Steel Limited has established itself as a reliable player in the steel industry, manufacturing high-quality galvanised 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.

Newmalayalam Steel IPO Key Details

• IPO Open Date: December 19, 2024
• IPO Close Date: December 23, 2024
• Face Value: ₹10 per share
• Price Band: ₹85 to ₹90 per share
• Lot Size: 1,600 shares
• Total Issue Size: 46,40,000 shares (₹41.76 Cr)
• Fresh Issue: 46,40,000 shares (₹41.76 Cr)
• Listing Platforms: NSE SME
• Market Maker: Aftertrade Broking Pvt Ltd

Newmalayalam Steel Ltd. Financials

Newmalayalam Steel showed fluctuating performance from FY22 to FY24. Revenue decreased from ₹323.61 Cr to ₹303.15 Cr, with a peak of ₹359.96 Cr in FY23. PAT declined steadily from ₹6.73 Cr to ₹4.27 Cr. However, assets grew from ₹90.02 Cr to ₹116.25 Cr, and net worth increased consistently from ₹30.19 Cr to ₹40.47 Cr.

The company experienced a decline in revenue and profitability in FY2024, attributed to market challenges. However, it has maintained a strong balance sheet with growing assets and net worth.

Competitive Strengths and Advantages of Newmalayalam Steel IPO

• Widespread Distribution Network: Extensive dealer base ensuring market penetration.
• Diversified Product Portfolio: Wide range of galvanized products catering to multiple industries.
• Brand Recognition: Strong market presence under the “Demac Steel” brand.
• Cost Efficiency: Strategic location and solar power generation reduce operational costs.
• Established Relationships: Long-standing partnerships with clients and suppliers.
• Modern Infrastructure: State-of-the-art manufacturing facilities ensuring quality and efficiency.

Newmalayalam Steel IPO Risks and Challenges

• 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.

Conclusion – Should You Invest in Newmalayalam Steel IPO?

Newmalayalam Steel IPO presents an opportunity to invest in a growing steel manufacturer with strong brand recognition and a well-established market presence. The company’s focus on sustainability, cost efficiency, and product diversification highlights its growth potential. However, investors should carefully evaluate the risks, including market competition and recent financial performance.

This IPO is suited for investors with a medium-to-high risk appetite seeking long-term gains in the steel manufacturing sector.

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.