Kalana Ispat SME IPO gives a rude shock

Posted on by

Kalana Ispat, an NSE-SME company, gave a reality check to investors who wished to make quick buck through SME-IPO investments. In a shock to investors, the stock was listed at ₹45.15, against the IPO price of ₹66, a loss of ₹20.85 or a whopping loss of 31.6 per cent. The stock dipped further to ₹43, but closed slightly higher at ₹47.40 (upper circuit from listing price), a loss of 28.18 per cent over the IPO price.

The IPO saw a strong response from all category of investors by subscribing nearly 60 times; retail investors portion was subscribed about 74 times, according to Chittogarh.com.

With a lot size of 2,000 shares, investors who received allotment have incurred a loss of ₹37,200 on their investment of ₹1.32 lakh.

Entirely fresh issue

The ₹32.60-crore IPO, with 49.38 lakh shares on offer, was entirely a fresh issue.

Of the net proceeds, the company intends to use ₹23.10 crore for capital expenditure for installing a 4-MW DC and 3.5-MW AC ground-mounted solar power plant featuring a TPSAT structure and about ₹8 crore to establish a rolling mill at Sanand, Ahmedabad. The remaining will be allocated toward general corporate purposes, supporting the company’s operational and strategic growth, the company said in the IPO filing.

Kalana Ispat manufactures MS Billets/Ingots and Alloy Steel Billets/Ingots of various grades. The company operates in two main segments: product sales and service sales, and has an annual production capacity of 38,000 tonnes. It had posted a revenue of ₹73.72 crore and net profit of ₹2.36 crore for FY24.

SEBI and market experts have been raising alarm over crazy subscriptions and investors’ appetite to make quick profits through listings. ”Investors should exercise caution when buying shares of SMEs, adding that some companies and their majority stakeholders had misrepresented their operations,” SEBI said recently.