Kalana Ispat IPO Lists at ₹45.15 on NSE SME, Drops 31.6%

Kalana Ispat Limited, a manufacturer of M.S. and Alloy Steel Billets, made a disappointing debut on the Indian stock market on Thursday, 26th September 2024, with its shares listing at a significant discount to the issue price. Despite strong investor demand during the subscription period, the company's initial public offering (IPO) failed to maintain momentum on its first day of trading.

Listing Details

• Listing Price: Kalana Ispat shares were listed at ₹45.15 per share on the NSE SME platform, marking a weak start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial discount to the IPO issue price. Kalana Ispat had set its IPO price at ₹66 per share.
• Percentage Change: The listing price of ₹45.15 on the NSE SME translates to a discount of 31.6% below the issue price of ₹66.

First-Day Trading Performance

• Opening vs. Latest Price: Following its weak opening, Kalana Ispat's share price recovered some ground. By 10:25 AM, the stock was trading at ₹47.40, up 4.98% from its opening price but still 28.18% below the issue price.
•  Market Capitalisation: As of 10:25 AM, the company's market capitalisation stood at ₹61.81 crore.
• Trading Volume: The traded volume was 4.62 lakh shares with a traded value of ₹2.14 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market reacted negatively to Kalana Ispat's listing. The significant discount to the issue price indicates weak demand and investor caution regarding the company's prospects.
• Subscription Rate: Despite the weak listing, the IPO was oversubscribed by 59.92 times, with retail investors leading at 74.54 times subscription and NIIs at 40.69 times.
• Grey Market Premium: The listing price was set at a level that closely reflected the unofficial trading prices observed in the grey market, indicating a lack of investor enthusiasm for a significant premium
• Price Band: After initial volatility, the stock hit its upper circuit of ₹47.40 (5% above the opening price) during morning trading.

Growth Drivers and Challenges

Expected drivers of future performance:

• Innovation-focused business model
• Established track record in the industry
• Experienced promoters and dedicated employees
• Plans for solar power plant installation

Potential challenges:

• Highly competitive metal products sector
• Volatility in raw material prices
• Sustainability concerns over recent profit growth

Utilisation of IPO Proceeds

Kalana Ispat plans to use the funds for:

• Installation of a 4 MW DC & 3.5 MW AC ground-mounted solar power plant
• Setting up a rolling mill in Ahmedabad
• General corporate purposes

Financial Performance

The company has demonstrated mixed financial results:

• Revenue decreased by 11% to ₹7,394.46 lakh in FY2024 from ₹8,335.87 lakh in FY2023
• Profit After Tax (PAT) rose significantly by 373% to ₹236.7 lakh in FY2024 from ₹50.09 lakh in FY2023

As Kalana Ispat IPO begins its journey as a listed entity, market participants will closely monitor its ability to leverage its manufacturing capabilities and execute its expansion plans to drive future growth and improve shareholder value. The weak listing, despite strong subscription rates, suggests cautious market sentiment towards the company's prospects in the competitive steel manufacturing sector.