Newmalayalam Steel Share Price: Flat Listing at ₹90 on NSE SME

Newmalayalam Steel Limited, a Kerala-based manufacturer of galvanized pipes and tubes operating since 2017, marked its entry into the public markets on Friday, 27th December 2024. The company, which has established itself with a 3,500 MT manufacturing capacity and brand presence through "Demac Steel," commenced trading on the NSE SME platform amid mixed investor response.

Newmalayalam Steel Listing Details 

The company's market debut reflected cautious investor sentiment despite its established business model:

Listing Time & Price: When trading commenced at market open, Newmalayalam Steel shares debuted at ₹90 on NSE SME, exactly at the IPO price, falling short of grey market expectations which had indicated a potential 33% premium. This flat opening suggests investors took a measured view of the company's near-term prospects despite its established manufacturing capabilities.

Issue Price Context: The company had set its IPO price band between ₹85 and ₹90 per share, ultimately fixing the final issue price at ₹90. The pricing aimed to balance growth funding needs with market accessibility.
Price Evolution: By 10:19 AM IST, the stock declined to hit the lower circuit at ₹85.50, representing a 5% drop from the issue price, indicating some selling pressure in early trading.

First-Day Trading Performance of Newmalayalam Steel

The trading activity showed significant volume but with downward pressure:

Volume and Value: Within just the first few hours, 4 lakh shares changed hands, generating a turnover of ₹3.59 crore. Notably, 100% of traded shares were marked for delivery, suggesting genuine investor participation rather than speculative trading.

Demand Dynamics: The stock's trading pattern showed considerable selling pressure with offers for 8.51 lakh shares while buyers remained absent at the lower circuit, reflecting cautious investor sentiment after the flat listing.

Market Sentiment and Analysis

Market Reaction: Initial selling pressure leading to lower circuit

Subscription Rate: The IPO had been oversubscribed by 50.69 times, with retail investors leading at 87.7 times subscription, followed by NIIs at 24.63 times, and QIBs at just 1.26 times
Pre-listing Expectations: Grey market premium had indicated potential for a 33% listing gain, which failed to materialize

Growth Drivers and Challenges For Newmalayalam Steel

Expected drivers of future performance:

• Widespread distribution network
• Diversified product portfolio
• Established brand recall
• Strategic manufacturing location
• Quality assurance focus

Potential challenges:

• Recent revenue decline
• Competitive industry dynamics
• Working capital intensity
• Raw material price volatility

Utilisation of Newmalayalam Steel IPO Proceeds 

The ₹41.76 crore raised will be used for:

• IT and manufacturing technology upgrades
• Solar facility expansion
• New factory shed construction
• Marketing and brand building
• Working capital requirements
• General corporate purposes

Financial Performance of Newmalayalam Steel

The company has shown mixed results:

• Revenue decreased by 15.78% to ₹303.15 crore in FY2024 from ₹359.96 crore in FY2023
• H1 FY2025 (ended September 2024) showed revenue of ₹155.34 crore with PAT of ₹5.19 crore
• Moderate financial metrics with ROE of 10.55% and ROCE of 17.60%

As Newmalayalam Steel begins its journey as a listed entity, market participants will closely monitor its ability to execute expansion plans and improve operational efficiency. The flat listing and subsequent lower circuit suggest investors are taking a cautious view of the company's prospects in the competitive steel products sector, though its focus on technological upgrades and capacity expansion could provide future growth opportunities.