Newmalayalam Steel shares list flat at ₹90 apiece on NSE SME, decline 5% to hit lower circuit

Steel products maker Newmalayalam Steel Ltd made a muted debut on Friday, December 27, with its shares listing flat at ₹90 apiece on the NSE SME platform compared to the IPO price.

Shares of the company started trading at the issue price of ₹90 apiece on the NSE Emerge platform and soon dropped as much as 5% to hit the lower circuit limit at ₹85.5 per piece due to selling by investors.

More than 3.82 lakh equity shares changed hands on the bourse in early deals. The total trading value stood at ₹3.44 crore. The company's market capitalisation reached ₹147.81 crore.

As Newmalayalam Steel shares listed flat, the value of a single lot of shares of Newmalayalam Steel bagged by IPO investors in the allotment stood at ₹1,44,000 (₹90 x 1,600).

IPO investors who bagged shares in the share allotment would not have made any gains after listing of the stock.

The company has raised ₹41.76 crore through its public offer which was open for subscription from December 19 to December 23. The company had set the price band at ₹85 to ₹90 per share.

The Newmalayalam Steel IPO was subscribed by 50.73 times at the close of the bidding. The IPO received bids for more than 22.35 crore shares against 44.06 lakh shares on offer.

The Non-Institutional Investors portion was booked 24.74 times. The retail investors’ quota was booked 87.7 times, reflecting strong demand for the IPO. The Qualified Institutional Buyers’ portion was subscribed 1.26 times.

Newmalayalam Steel Ltd manufactures steel products like galvanised pipes, tubes, and sheets. The company sells its products under the brand name of ‘Demac Steel’ in Kerala.

Galvanised pipes and tubes are used for building roofs to reduce heat and avoid leakage, further, the galvanisation process offers an added advantage of increasing the life of the product and enhancing its quality by making it rust-free.

Newmalayalam Steel IPO objects

According to Newmalayalam Steel RHP, the company has proposed to utilise the IPO funds for following purposes.

A sum of ₹2.87 crore will be used for IT and Technological Upgradation of existing manufacturing facilities. The company will invest ₹2.34 crore in the expansion of the existing solar facility for power generation.

A portion of the fund will be used for expenditure towards civil construction of new factory shed cum storage facility within the existing factory premises situated at Kerala. As much as ₹14.9 crore will be used for funding incremental working capital requirements of the company.