Abha Power and Steel Lists at 9% Premium, Hits Lower Circuit on NSE SME

Abha Power and Steel Limited, established in 2004 and specializing in customized iron and steel castings, operates a 14,400 metric tonnes per year capacity facility in Bilaspur, Chhattisgarh. Its product portfolio includes mild steel, SG cast iron, and stainless steel, serving industries like power and Indian Railways. The company debuted on the NSE SME platform on 4th December 2024.

Abha Power and Steel Listing Details

• Listing Time & Price: At market open, Abha Power and Steel share price listed at ₹81.90 on NSE SME, marking a 9.20% premium over the IPO price.
• Comparison to Issue Price: The listing price represents a decent premium over the IPO issue price. The IPO price of Abha Power and Steel was set at ₹75 per share. The listing price represented a premium of 9.20% over the issue price.
• Percentage Change: At 12:18 PM IST, the stock was trading at ₹77.80, down by around 5% from its listing price.

Abha Power and Steel First-Day Trading Performance

• Price Range: Stock listed at a high of ₹81.90 and hit a low of ₹77.80 in early trading, with VWAP at ₹79.94.
• Market Capitalisation: As of 12:58:45 PM IST, the company's market capitalisation stood at ₹144.61 crore.
• Trading Volume: The traded volume was 21.50 lakh shares with a traded value of ₹17.19 crore.
• Market Sentiment and Analysis
• Market Reaction: Within around 20 minutes of listing, the stock hit ₹77.80 before trading halted. Around 0.20 million shares were traded during that time span. 
• Subscription Rate:The IPO was oversubscribed 18.00 times during its bidding period, leading with retail investors at 24.93 times, followed by NIIs at 10.07 times subscription.
• Trading Range: Price band set between ₹81.90 and ₹77.80, with the stock trading at the lower band.

Abha Power and Steel Growth Drivers and Challenges

Expected drivers of future performance:

• Wide product range catering to diverse industries.
• Strategic location in Bilaspur with easy access to raw materials.
• Long-term relationships with established clients such as Indian Railways.
• Experienced management team with expertise in operational efficiency.

Potential challenges:

• High dependency on Indian Railways for a significant share of revenue.
• Concentration of operations in a single facility.
• Manual processes limiting productivity and scalability.
• Competition from larger, more established players in the industry.

Utilisation of IPO Proceeds 

Abha Power and Steel plans to use the funds for:

• Funding the capital expenditure towards modernization and upgradation of manufacturing facilities.
• Funding working capital requirements of the Company.
• General Corporate Purposes.

Abha Power and Steel Financial Performance

The company has shown strong growth:

• Revenue increased by 5.97% to ₹51.83 crore in FY2024 from ₹55.12 crore in FY2023
• Profit After Tax rose by 170% to ₹3.78 crore in FY2024 from ₹1.40 crore in FY2023

As Abha Power and Steel begins its journey as a listed entity, market participants will closely monitor its ability to reverse the declining revenue trend and maintain profitability. Although listing at a decent premium, the stock experienced a decline shortly after that. The initial market reaction highlights investor caution towards the company’s prospects in the iron and steel industry.