A-One Steels
A-One Steels
IPO Size: Rs. 405 cr
- Fresh Issue of Rs. 355 cr (11% dilution) for repaying Rs. 250 cr of Rs. 719 cr gross debt as of 15.7.26
- Offer for Sale (OFS) of Rs. 50 cr, by promoter (86% stake to shrink to 75%)
Price band: Rs. 385-405 per share
M cap: Rs. 3,128 cr (IPO is 13% of m cap)
IPO Date: Thu 24th Sep to Mon 28th Sep 2026, Listing Thu 1st Oct 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Sponge Iron to TMT Bar Manufacturer
A-One Steels is a 13-year-old Bengaluru based secondary steel manufacturer, converting sponge iron into MS billets and further to finished products such as TMT bars, HR coils, CR coils, HR (MS) pipes, CR pipes, galvanized tubes and pipes. It has 6 manufacturing plants in Karnataka and Andhra Pradesh with aggregate installed capacity of 17.33 lakh MTPA across all products, utilised 89% in FY26. A 6 MW power plant, to be expanded to 10 MW soon, has been recently commissioned. Nearly ~85% of power requirement is met from renewal sources.
Large Capex Undertaken
In the past 3 fiscals, company has undertaken nearly Rs. 400 cr capex between FY24 to FY26, increasing overall aggregate capacity by 16%. This was partially funded via Rs. 247 cr equity raised at Rs. 250 per share in Jun-Jul 2024 from few individual investors.
Over the next 2 years, company plans Rs. 200 cr capex, including for setting up a 6 lakh MTPA capacity iron ore beneficiation plant, half of which capacity is to be commissioned in FY27E and balance in FY28E. In addition, A-One Steels is establishing a railway siding for inward transportation of raw material, likely to be commercialised by Jun 2027. While Rs. 250 cr is sought to be repaid via IPO proceeds, some of it may soon be back in the books, to fund the future growth. Credit rating of BBB+/Stable by Crisil is just about average.
Volatile Financials
Company’s financials have been highly volatile in the past 5 years. While revenue rose at 11% CAGR from Rs. 2,750 cr in FY22 to Rs. 4,150 cr in FY26, PAT rose at only 6% CAGR from Rs. 101 cr in FY22 to Rs.127 cr in FY26. Swift movement in steel prices adversely impacted profitability, such that FY25 PAT fell to Rs. 8 cr (0.2% net margin) from Rs. 39 cr in FY24 (1% net margin) and from Rs. 98 cr in FY23 (3% net margin).
In FY26, EBITDA margin stood at 7.3% on Rs. 302 cr EBITDA while net margin was 3.1% with EPS of Rs. 18.5. While debtors and inventory holding is high, overall working capital management is good, at 53 days.
Inline Pricing
M cap of Rs. 3,128 cr and Enterprise Value (EV) of over Rs. 3,500 cr implies a current year PE multiple of 20x on FY27E estimated EPS of close to Rs. 20. This is inline for highly volatile profits, 5-7% EBITDA margin, insignificant jump in profits despite Rs. 400 cr capex, net debt to EBITDA ratio of 1.2:1 and for an expected RoE in low teens. Peers are ruling in wide range of PEs from 14x (MSP Steel) to 40x (Jai Balaji) making comparison unconclusive and leaving little on the table for IPO investors.