VMS TMT IPO in focus: VMS TMT’s initial public offering (IPO) is scheduled to kick off for subscription on Wednesday, September 17, and will remain open until Friday, September 19.
The company aims to raise ₹148.50 crore through the offering, which is entirely a fresh issue of 1.50 crore shares. The IPO price band is set at ₹94 to ₹99 per share. Retail investors can apply for a minimum of 150 shares in one lot and can apply for up to 13 lots.
At the upper end of the IPO price band, ₹99 apiece, retail investors are required to make a minimum investment of ₹14,850 per lot.
Let us take a look at some of the key points mentioned in the VMS TMT RHP:
Business Overview: The company is engaged in the manufacturing of Thermo Mechanically Treated Bars at its manufacturing facility situated at Bhayla Village, Ahmedabad, Gujarat, India. TMT bars are high-strength reinforcement steel widely used in construction due to their exceptional strength, ductility, and corrosion resistance.
Business Concentration in Gujarat: It conducts its business predominantly in the State of Gujarat, from where it derived over 98% of its revenues from operations in fiscal 2024. Its revenue from operations in fiscal 2024 from the sale of TMT bars in Gujarat constituted approximately 94% of the total revenue from operations, wherein retail sales constituted 80% and institutional sales constituted 14% of the total revenue.
Retail Licensing Agreement with Kamdhenu: The company has a retail licence agreement dated November 7, 2022, with Kamdhenu Limited, which allows it to market its TMT Bars under the brand ‘Kamdhenu NXT’ on mutually agreed terms within the State of Gujarat on a non-exclusive basis.
Production Capacity: As of Fiscal 2024, Fiscal 2023, and Fiscal 2022, it had a total annual installed capacity of TMT Bars of 2 lakh metric tonnes per annum for each year. Its production of TMT bars in fiscal 2024, fiscal 2023, and fiscal 2022 was 1.60 lakh MT, 1.61 lakh MT, and 72,121 MT, respectively.
Backward Integration & Raw Material Security: The company currently buys billets locally in Gujarat to produce its TMT bars. However, to enhance backward integration and increase raw material security, it has recently installed a thirty-ton electric induction furnace and continuous caster for manufacturing TMT bars, along with a power substation having 22,000 kVAh.
As part of this project, it will manufacture billets for its TMT Bar production as part of a consolidated manufacturing process with an installed capacity of 216,000 MT per annum.
Diversification Into MS Pipes: The company has diversified its operations to include the production and sale of MS Pipes. In July 2024, it commenced the trial phase of production of MS pipes and MS pipes with specifications ranging from 0.5” to 3” in diameter and a thickness of 1 mm to 2 mm.
Debt Borrowings Position: The company’s debt levels remain high, with debt-to-equity and debt-to-EBITDA ratios at 4.25 times and 4.77 times, respectively, for Fiscal Year 2024. However, these figures represent a significant improvement from 5.28 times and 7.39 times in Fiscal 2023, indicating a gradual deleveraging trend.
As of August 31, 2024, total borrowings stood at ₹25,251.83 lakhs, including ₹16,454.01 lakhs in secured borrowings and ₹8,797.82 lakhs in unsecured borrowings.
Objectives of the Issue: The company proposes to use the funds from the proceeds towards repayment/prepayment, in full or part, of all or a portion of certain borrowings availed by the company and for general corporate purposes.
Key Risks: The company is heavily reliant on its retail licence agreements with Kamdhenu Limited and a few major customers, with the top three accounting for over 80% of revenue in Fiscal 2024. Termination of these agreements or loss/reduction of purchases from key customers could materially impact the business and its financial performance.
Allotment and Listing Details: The allotment of shares is expected to be finalized on September 22, 2025, with a tentative listing on both the BSE and NSE scheduled for Wednesday, September 24, 2025.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
