VMS TMT
IPO Size: Rs. 149 cr, Entirely Fresh Issue
- For Rs. 115 cr debt repayment, of Rs. 297 cr net debt
Price band: Rs. 94-99 per share
Allocation: Min 50% for retail investors, min 20% HNI and max 30% for institutions
M cap: Rs. 491 cr, implying 30% dilution
IPO Date: Wed 17th Sep to Fri 19th Sep 2025, Listing Wed 24th Sep 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Gujarat-based TMT Bar Maker
VMS TMT manufactures Thermo Mechanically Treated (TMT) Bars, at its 2 lakh MTPA capacity plant in Ahmedabad, Gujarat. While it has 3 distributors and 227 dealers to sell under Kamdhenu brand (licensed on non-exclusive basis for Gujarat excluding Saurashtra and Kutch), company is primarily a B2B player, as top 4 customers account for ~90% of Rs. 800 cr revenue. It is establishing a 15 MW solar power plant to part-meet 22 MW total power requirement, for which land has been acquired.
Margin Expand in Q1FY26
FY25 revenue stood at Rs. 770 cr, with PAT of Rs. 15 cr and net margin of 2%. In Sep 2024, it completed backward integration by commissioning 2.16 lakh MTPA continuous casting machine (CCM) for billets, which enables TMT bar manufacturing from scrap. Moreover, capacity utilisation surged to 84% in Q1FY26, from 72% in FY25. Both these factors contributed to margin expansion.
On Q1FY26 revenue of Rs. 212 cr, net margin doubled to 4%, with PAT of Rs. 9 cr. On an equity of Rs. 35 cr (FV Rs. 10 each), EPS stood at Rs.4.5 and Rs. 2.5 for FY25 and Q1FY26 respectively.
Company will repay 1/3rd debt from IPO proceeds saving interest cost, but net debt will still be high at Rs. 180 cr, post IPO, leading to debt equity ratio of 0.7:1 and net-debt to EBITDA of 2.3x.
Fully Priced Nano Cap Stock
M cap of Rs. 491 cr leads to a PE multiple of about Rs. 11x on FY26E EPS of Rs. 8.6. VMS’s 4% net margin is significantly lower than peers such as Kamdhenu, Vraj, BMW Industries clocking 6% to 11% net margin, besides being debt-free or having much lower debt, and ruling at PE multiples of 12-14x.
This makes VMS IPO fully priced, as it is not even a small reginal B2B player, but has poorer margin than peers and is debt-laden. Do not get lured by recent rise in margin or ‘low teen’ PE multiple.
