Deem Roll Tech's IPO continues to see strong demand from retail investors on its second day; GMP is rising

Deem Roll Tech's IPO opened for subscription on Tuesday, February 20th and closes on Thursday, February 22nd. The price range for Deem Roll Tech's IPO has been set at ₹129 each. The lot size of Deem Roll Tech IPO is 1,000 shares. Investors can bid for at least 1,000 shares and multiples thereof.

Backed by a first generation businessman and a technocrat, Deem Roll Tech produces premium steel and alloy rolls in India. The company's rollers are used in rolling mills for steel and iron at home and abroad.

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Through a network of dealers, distributors and agents, Deem Roll Tech supplies its rolls directly to rolling mill manufacturers (OEMs) and, in the replacement market, to mills that roll iron and steel. The company exports buns to more than ten countries including the USA, Germany, Europe, the Middle East, Oman, Saudi Arabia, South Africa, Nepal and Bangladesh.

As of September 30, 2023, Deem Roll Tech has served a total of 30 export customers and over 340 domestic customers. The percentage of Deem Roll Tech's operating revenue derived from export sales was 17.19%, 20.00%, 16.91% and 16.56% for the six-month period ended September 30, 2023 and for fiscal years 2023 and 2022 , and 2021.

According to the company's prospectus, its listed competitor is Tayo Rolls Limited (with a P/E ratio (with bonus) of (-28.43)).

Between March 31, 2022 and March 31, 2023, Deem Roll Tech Limited's profit after tax (PAT) increased by 68.88% and revenue increased by 13.42%.

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Deem Roll Tech IPO details

Consider Roll Tech's IPO worth taking ₹29.26 crore, comprising a fresh issue of 22,68,000 shares of face value ₹10. This is a completely new problem and there is no offer component.

The company informed its investors through an advertisement on Financial Express (FE) that it has made a pre-IPO placement of 2,32,000 shares at an issue price of $1,000 ₹129 each, totaling Rs 299.28 Lakhs (pre-IPO placement). The size of the new edition is up to ₹3,225 Lakhs which is reduced by ₹299.28 Lakhs as per the pre-IPO placement and the revised size of the fresh issue is ₹29.26 crore.

The Company plans to utilize the funds raised through the fresh issue to meet working capital requirements, general corporate purposes and capital expenditure for the development of its current manufacturing base in Mehsana, Gujarat, India.

The registrar of the Deem Roll Tech IPO is Bigshare Services Pvt Ltd while the book running lead manager is Fedex Securities Pvt Ltd. Ss Corporate Securities is the market maker for the Deem Roll Tech IPO.

Preliminarily, the basis for allotment of the shares will be determined after Deem Roll Tech's IPO on Friday, February 23, and the company will issue refunds on Monday, February 26, while the shares will be issued on the same day after the Refund will be credited to the demat account of the allottees . Deem Roll Tech share price is expected to list on NSE SME on Tuesday, February 27.

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Deem Roll Tech IPO Subscription Status

The subscription status for Deem Roll Tech IPO is at 4.21 on the second day so far. The issue received positive response at 12:40 pm from retail investors whose share rate was subscribed 6.78 times and non-institutional buyers whose share rate was subscribed 1.63 times IST, according to data on chittorgarh.com.

According to chittorgarh.com, the company has received offers for 90,70,000 shares against 21,54,000 shares on offer as of 12:40 IST.

Deem Roll Tech's IPO subscription status is 2.29x on the first day.

Consider Roll Tech IPO GMP today

Deem Roll Tech IPO GMP or gray market premium is +45, which is a significant increase from yesterday's +34. This suggests that Deem Roll Tech's share price was trading at a premium of ₹45 on the gray market, according to www.investorgain.com

Taking into account the upper end of the IPO price range and the current gray market premium, the estimated listing price of Deem Roll Tech stock is ₹174 per piece, which is 34.88% higher than the IPO price of ₹129.

“Gray market premium” indicates investors’ willingness to pay more than the issue price.

Valuing Deem Roll Tech IPO

“The company is engaged in manufacturing high-quality steel and alloy rolls, which will generate high demand given the accelerated development and expansion of steel manufacturing infrastructure. This means the company is prepared for good future prospects. Based on annualized returns for FY24, the issue appears to be fully priced in. A low equity base after the IPO indicates a longer gestation period for the migration to the mainboard. “Investors can invest moderate funds for medium to long-term returns,” said Dilip Davda, Editor, Chittorgarh.

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Disclaimer: The above views and recommendations are those of individual analysts, experts and brokerage firms, not Mint. We recommend investors consult certified experts before making an investment decision.

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