VMS TMT IPO listing today. Modest GMP signals cautious debut – News Air Insight

VMS TMT, a Gujarat-based steel manufacturer, is set to list its shares on the bourses on September 24 after closing its Rs 148-crore IPO on September 19. Ahead of its debut, the stock is commanding a grey market premium (GMP) of around 12%, suggesting a tepid listing pop for investors.

The IPO, priced in the range of Rs 94–99 per share, was a fresh issue of 1.5 crore shares. At the upper end of the price band, the company’s market capitalisation works out to about Rs 491 crore. The issue received decent demand across categories, with retail investors subscribing to over half the shares on offer.

Business and strengths

Incorporated in 2013, VMS TMT manufactures thermo-mechanically treated (TMT) bars, widely used in the construction sector for their strength, ductility, and resistance to corrosion.The company operates out of Bhayla village near Ahmedabad and markets its products under its own name as well as through a licensing agreement with Kamdhenu that allows it to use the “Kamdhenu NXT” brand in Gujarat.

The company is also moving towards backward integration by setting up billet production facilities, a step aimed at reducing raw material dependency and controlling costs. Additionally, it has forayed into mild steel pipes, expanding its product portfolio.

Financial performance

VMS TMT’s financial turnaround has been striking. The company’s profit after tax jumped to Rs 268 crore in FY25 from just Rs 13.5 crore in FY24, even as revenue moderated to Rs 770 crore from Rs 873 crore. EBITDA margins improved sharply to nearly 39% in FY25 from under 5% in FY24.Return ratios also expanded, with RoE at 54% and RoIC at 96% for FY25, indicating improved efficiency and profitability. The debt-equity ratio stood at 0.9x, reflecting manageable leverage levels for a manufacturing-led business.

Outlook

The IPO was fully fresh capital, aimed primarily at repaying borrowings (Rs 115 crore) and meeting general corporate purposes. Post-issue, promoter holding has reduced from 96.3% to 67.2%, while public holding stands at 32.8%.

While fundamentals appear strong on the back of a sharp earnings expansion, analysts have flagged that the FY25 spike in profitability may not be sustainable at the same pace. At the upper price band, the stock was valued at a P/E of 25x FY25 earnings, which looks reasonable compared with sector peers.

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