Kalana Ispat Limited IPO: A Comprehensive Investment Analysis for 2024

Table of Contents

Introduction to Kalana Ispat Limited

Kalana Ispat Limited, established in 2012 by visionaries Mr. Aftabhusen S. Khandwawala and Mr. Varghese Joseph Pottakerry, has made significant strides in the steel industry, with a focus on manufacturing high-quality M.S. Billets. What began as a metal scrap trading entity has now evolved into a key player in billet manufacturing, showcasing the company’s commitment to innovation and operational excellence.

More details of Kalana Ispat Limited here.

Kalana Ispat Limited Peer Comparisons

Kalana Ispat IPO Overview

Dates: The IPO will open for subscription from September 19 to September 23, 2024.
Price: Each share is priced at ₹66.
Issue Size: Kalana Ispat aims to raise approximately ₹32.59 crores.
Purpose: The proceeds will be used for establishing a solar power plant and a new rolling mill, marking a strategic push toward sustainability and production expansion.

Below is a tabular representation of the Kalana Ispat Limited IPO based on the information provided:

Aspect	Details
IPO Open Date	September 19, 2024
IPO Close Date	September 23, 2024
Issue Type	Fixed Price Issue
Price Band	₹66 per share
Issue Size	₹32.59 Crores
Fresh Issue	₹32.59 Crores
Offer for Sale	Not specified
Face Value	₹10 per share
Market Lot	2000 shares
Listing Date	September 26, 2024
Allotment Date	September 24, 2024
Retail Quota	50%
QIB Quota	0% (Not applicable for SME IPOs)
HNI Quota	50%
Revenue (2024)	₹73.94 Crores
Revenue (2023)	₹83.36 Crores
Profit (2024)	₹2.37 Crores
Profit (2023)	₹0.50 Crores
Lead Manager	Jawa Capital
Registrar	Sky Line Financial Services Pvt Ltd

This table summarizes key details about the Kalana Ispat Limited IPO, focusing on dates, financials, and procedural aspects of the IPO.

Company Background and Mission

Kalana Ispat’s mission is to lead the steel industry by providing high-quality billets through advanced manufacturing techniques. The company’s vision extends beyond profits; it aims to empower industries globally with innovative steel solutions, focusing on sustainability, innovation, and customer satisfaction.

Financial Performance

Despite a slight decrease in revenue from ₹83.36 crores in 2023 to ₹73.94 crores in 2024, Kalana Ispat’s profit surged from ₹0.50 crores to ₹2.37 crores during the same period. This demonstrates the company’s resilience and sound management, even amid market fluctuations.

Here’s a tabular representation of Kalana Ispat Limited’s financial information for the last four fiscal years:

Financial Metric	31 Mar 2024	31 Mar 2023	31 Mar 2022	31 Mar 2021
Assets	₹1,885.71 L	₹1,617.46 L	₹1,264.89 L	₹1,330.70 L
Revenue	₹7,394.46 L	₹8,335.87 L	₹5,793.32 L	₹4,298.06 L
Profit After Tax (PAT)	₹236.70 L	₹50.09 L	₹13.66 L	₹13.62 L
Net Worth	₹1,081.58 L	₹441.94 L	₹391.65 L	₹376.19 L
Reserves and Surplus	₹271.46 L	₹339.70 L	₹289.61 L	₹275.95 L
Total Borrowing	₹461.38 L	₹861.79 L	₹260.57 L	₹262.93 L

Key Observations:

Revenue: There was an 11% decrease in revenue from FY23 to FY24, indicating a challenging year or possibly strategic shifts in business operations.
Profit After Tax (PAT): Despite the revenue drop, PAT surged by 373% from FY23 to FY24, suggesting significant improvements in operational efficiency or cost management.
Assets: A consistent increase in assets over the years, with a notable jump from FY23 to FY24, possibly due to investments or retained earnings.
Net Worth: A substantial increase in net worth, particularly in FY24, reflecting the company’s profitability and perhaps capital infusion or retained earnings.
Reserves and Surplus: A decrease from FY23 to FY24 might be due to utilization of reserves for investments or dividends.
Total Borrowing: A significant reduction in borrowings from FY23 to FY24, indicating better financial health or successful debt repayment strategies.

This financial overview provides a snapshot of Kalana Ispat Limited’s performance, highlighting areas of growth and areas that might need further analysis or explanation in the context of their IPO.

Market Analysis

Industry Context: The steel sector is known for its cyclical nature, but Kalana Ispat’s focus on renewable energy integration gives it a competitive edge in a market that increasingly values sustainable practices.
Competitive Landscape: While the billet manufacturing sector is competitive, Kalana’s foray into solar energy and its production expansion could differentiate it from its rivals.

Investment Considerations

Risks: As with any SME, investing in Kalana Ispat involves certain risks, such as market volatility, liquidity issues, and operational challenges. However, the company’s strategic direction toward renewable energy and expansion could mitigate some of these risks.
Opportunities: Kalana’s commitment to green energy and increasing production capacity offers the potential for substantial returns, especially if market conditions favor steel sector growth.

Grey Market Premium (GMP)

Grey Market Premium (GMP):

The GMP for Kalana Ispat’s IPO has been fluctuating but was noted at ₹35 per share at one point, suggesting a listing price expectation around ₹101, which represents a significant premium over its issue price of ₹66 per share. However, another report mentioned a GMP of ₹20, indicating a grey market expectation of a 30.3% listing gain.

Market Sentiment and Analyst Views:

Sentiment: Mixed. While there’s evident interest from retail investors, the GMP surge suggests speculative excitement or confidence in a strong listing performance. However, some analysts pointed out concerns like revenue degrowth and dependency on the steel sector as red flags.
Advice: Recommendations varied, with some suggesting caution due to the aggressive pricing and sector dependence, while the grey market activity hinted at optimism for post-listing gains.

The GMP reflects investor sentiment and speculation in the grey market, which is an unofficial market where shares can be traded before they are officially listed on the stock exchange. However, it’s worth noting that GMP can be volatile and is not always indicative of the actual listing price or the stock’s performance post-listing. Always consider other factors and conduct thorough research before making investment decisions.

Subscription and Allotment

Day 1 Subscription: The IPO saw a modest start with a subscription rate of 0.05 times by midday.
Day 2 Status: Subscription improved, with retail interest noted at 3.09 times, but still, the overall response remained below expectations initially.
Overall Subscription: Despite the initial slow start, there was a noted increase in interest with retail and NII categories showing stronger demand later in the subscription period.
As of September 23, 2024, the Kalana Ispat Limited IPO has been oversubscribed 19.08 times, with retail investors leading the charge, showing a massive subscription ratio of 29.40 times. Non-institutional investors (NII) have subscribed at 8.76 times. This strong demand suggests a positive market sentiment towards the IPO.
Allotment: The final allotment of shares is expected on September 24, 2024.

Post-IPO Expectations

Short-term: While short-term price movements may be volatile, Kalana Ispat’s investment in solar power could generate positive market sentiment and drive performance.
Long-term: In the long run, the company’s expansion plans, emphasis on sustainability, and growing market share could lead to sustained profitability, making it an attractive option for long-term investors.

Conclusion

Kalana Ispat Limited’s IPO not only represents a potential investment opportunity but also stands as a testament to the company’s commitment to innovation and sustainability within the steel industry. While risks remain, the strategic initiatives toward renewable energy and expanding production could offer significant returns for investors in the future.

Call to Action

For potential investors, it is crucial to stay informed about the latest financial news and trends through platforms like X for real-time updates. Kalana Ispat’s journey is just beginning, and investors who believe in the company’s vision of a sustainable future may find this IPO to be a rewarding opportunity.

Kalana Ispat IPO Kalana Ispat Limited IPO Details Kalana Ispat Share Price Kalana Ispat IPO Subscription Kalana Ispat IPO GMP (Grey Market Premium) Kalana Ispat Financial Performance Kalana Ispat Investment Analysis Kalana Ispat IPO Risks Kalana Ispat IPO Allotment Status Kalana Ispat IPO Long-term Prospects