Classic Electrodes Makes Strong Debut with 15% Premium, Exceeding Market Expectations

Classic Electrodes (India) Limited, the welding consumables manufacturer, made a strong debut on NSE SME on September 1, 2025. After closing its IPO bidding between August 22-26, 2025, the company commenced trading with a solid 15% premium at ₹100, exceeding market expectations and reflecting strong investor confidence in the industrial manufacturing sector.

Classic Electrodes Listing Details

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Classic Electrodes (India) Limited IPO launched at ₹87 per share with a minimum investment of 3,200 shares costing ₹2,78,400. The IPO received an overwhelming response with a subscription of 179.97 times - NII leading at 356.75 times, individual investors at 158.44 times, and QIB at 84.88 times, indicating exceptional investor interest across all categories in the welding consumables business.

First-Day Trading Performance Outlook

• Listing Price: The Classic Electrodes share price opened at ₹100 on NSE SME, representing a premium of 14.94% from the issue price of ₹87, delivering substantial gains for investors and exceeding market expectations.

Growth Drivers and Challenges

Growth Drivers:

• Established Market Position: Strong brand recognition with nearly three decades of experience since 1997, trusted by industrial users and distributors in India and select global markets.
• Diversified Product Portfolio: Comprehensive range of welding consumables, including mild steel electrodes, stainless steel electrodes, cast iron electrodes, deep penetration electrodes, and MIG wires, serving various industrial applications.
• Strategic Manufacturing Locations: Two manufacturing units in West Bengal and Haryana with modern production facilities and automated processes ensuring efficient product distribution and raw material sourcing.
• Strong Financial Metrics: Solid ROE of 24.66%, good ROCE of 17.68%, healthy PAT margin of 5.10%, and reasonable EBITDA margin of 10.24% indicating operational efficiency.

Challenges:

• Revenue Decline Concerns: Revenue decreased from ₹194.41 crore in FY24 to ₹187.90 crore in the 11 months ending February 2025, indicating potential market challenges.
• Profit Volatility: PAT declined from ₹12.30 crore in FY24 to ₹9.57 crore in 11 months of FY25, raising concerns about earnings sustainability and margin pressures.
• High Debt Burden: Debt-to-equity ratio of 1.23 with total borrowings of ₹53.50 crore, creating significant financial leverage concerns affecting cash flow generation capabilities.
• Incomplete Financial Year: Financial data is only available till February 28, 2025, creating uncertainty about full-year performance and making comparative analysis challenging.

Utilisation of IPO Proceeds

• Working Capital Requirements: ₹16.60 crore for funding working capital needs, supporting business operations and inventory management in the welding consumables sector.
• Debt Reduction: ₹10 crore for repayment of outstanding borrowings, improving the capital structure and reducing financial leverage burden.
• General Corporate Purposes: ₹9.28 crore for general corporate purposes supporting business operations and strategic initiatives.
• Equipment Purchase: ₹1.47 crore for capital expenditure towards the purchase of plant and machinery, enhancing production capabilities.

Financial Performance of Classic Electrodes

• Revenue: ₹187.90 crore for 11 months ending February 2025, showing a decline from ₹194.41 crore in FY24, indicating market challenges and competitive pressures.
• Net Profit: ₹9.57 crore for 11 months ending February 2025, representing a decline from ₹12.30 crore in FY24, indicating margin pressures and operational challenges.
• Financial Metrics: Strong ROE of 24.66%, solid ROCE of 17.68%, high debt-to-equity ratio of 1.23, good RoNW of 21.95%, healthy PAT margin of 5.10%, reasonable EBITDA margin of 10.24%, Price to Book Value of 2.63, and market capitalisation of ₹156.30 crore.