Mittal Sections Makes Disappointing SME Debut, Lists at 20% Discount to Issue Price

Mittal Sections Limited has made a deeply disappointing debut on the BSE SME platform, reflecting weak investor appetite for the steel products manufacturer. The company commenced trading at ₹114.40, representing a significant 20% discount to its issue price of ₹143 per share.

This poor listing performance followed a weakly subscribed initial public offering that garnered only 2.25 times overall subscription. The market response highlighted serious concerns about the company’s aggressive valuation and financial performance sustainability.

IPO Subscription and Market Response

Mittal Sections Limited launched its IPO at ₹143 per share with a minimum investment of 2,000 shares costing ₹2,86,000. The public offering received tepid response across investor categories with retail investors subscribing at 4.08 times, QIB at 1.13 times, and NII at just 0.55 times.

The overall subscription of 2.25 times indicated limited institutional confidence in the company’s growth prospects. The weak demand ultimately translated into the substantial listing day discount witnessed by investors.

Financial Performance

The company’s financial metrics revealed concerning trends despite superficial profitability improvements. Revenue declined 15% from ₹161.65 crore in FY24 to ₹137.07 crore in FY25, raising questions about business momentum.

Meanwhile, net profit surged 91% from ₹1.89 crore to ₹3.61 crore during the same period, creating window dressing concerns. The combination of declining revenue and surging profits appeared designed to fetch fancy valuations during the IPO process.

IPO Proceeds Utilisation Plan

The company allocated ₹20.82 crore from IPO proceeds for capital expenditure toward land acquisition, factory construction, and machinery purchase. Working capital requirements will receive ₹15.00 crore while debt repayment is allocated ₹5.00 crore to improve financial leverage.

The remaining funds will support general corporate purposes and strategic initiatives in the competitive mild steel segments market. This allocation aims to address both growth ambitions and balance sheet strengthening.

Industry Challenges

The steel products manufacturing sector faces intense competition and margin pressures amid fluctuating raw material costs. The company’s declining revenue trajectory contrasts with industry growth patterns, raising sustainability concerns.

Capacity expansion during market uncertainty represents both opportunity and significant execution risk. The disappointing market debut reflects broader investor caution toward small-cap industrial manufacturers with aggressive growth plans.

Conclusion

Mittal Sections’ poor market debut underscores the importance of reasonable valuation and transparent financial reporting in public offerings. The substantial listing discount represents a sharp market correction to the company’s aggressive pricing strategy.

Investors will closely monitor the company’s ability to execute its expansion plans while improving operational efficiency and revenue growth. The listing experience serves as a cautionary tale for companies considering public offerings amid challenging market conditions.

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