Mittal Sections Make Poor Debut with 20% Discount, Lists at ₹114.40 Against Weak Subscription

Mittal Sections Limited, a manufacturer of mild steel sections and structural steel products, including MS flat bars, round bars, angles, and channels under the "MSL-MITTAL" brand with two manufacturing plants in Ahmedabad, having 36,000 MTPA capacity and expansion plans to 96,000 MTPA, made a disappointing debut on BSE SME on October 14, 2025. After closing its IPO bidding between October 7-9, 2025, the company commenced trading at ₹114.,40 representing a discount of 20.00%.

Mittal Sections Listing Details

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Mittal Sections Limited launched its IPO at ₹143 per share with a minimum investment of 2,000 shares costing ₹2,86,000. The IPO received a weak response with a subscription of just 2.25 times - retail investors at 4.08 times, QIB at 1.13 times, and NII at 0.55 times

First-Day Trading Performance Outlook

• Listing Price: Mittal Sections share price opened and remained at ₹114.40, representing a significant discount of 20.00% from the issue price of ₹143, delivering substantial investor losses, reflecting extremely negative market sentiment towards the company amid concerns about aggressive pricing and financial performance sustainability.

Growth Drivers and Challenges

Growth Drivers:

• Capacity Expansion Plans: Ambitious expansion from the current 36,000 MTPA to 96,000 MTPA capacity, strategic manufacturing plant locations in Changodar, Ahmedabad, providing cost efficiencies and stable supply chain benefits.
• Diversified Product Portfolio: A comprehensive range including MS Angles, MS Flats, MS Round Bars, and MS Channels, marketed under the "MSL-MITTAL" brand, known for its quality, durability, and meeting industry standards for various construction and engineering applications.

Challenges:

• Revenue Decline and Window Dressing Concerns: The top line decreased 15% from ₹161.65 crore in FY24 to ₹137.07 crore in FY25, while PAT surged 91%, raising serious concerns about window dressing with super earnings in the pre-IPO year appearing designed to fetch fancy valuations.
• Aggressive Valuation Metrics: Alarming price-to-book value of 10.87x (now effectively lower post-listing discount) and post-issue P/E of 18.79x appearing aggressively priced, elevated debt-to-equity ratio of 2.04, modest margins with PAT margin of just 2.64% representing a "High Risk/Low Return" proposition.

Utilisation of IPO Proceeds

• Capacity Expansion: ₹20.82 crore for capital expenditure towards acquisition of land, construction of factory building, and purchase of plant and machinery to achieve the expansion from 36,000 MTPA to 96,000 MTPA capacity.
• Working Capital and Debt Reduction: ₹15.00 crore for working capital requirements, and ₹5.00 crore for debt repayment, improving financial leverage from the elevated 2.04x debt-to-equity ratio.
• General Corporate Purposes: Supporting business operations and strategic initiatives in the competitive mild steel sections market.

Financial Performance of Mittal Sections

• Revenue: ₹137.07 crore for FY25, showing a concerning decline of 15% from ₹161.65 crore in FY24, raising serious questions about business momentum and market demand sustainability.
• Net Profit: ₹3.61 crore in FY25, representing exceptional growth of 91% from ₹1.89 crore in FY24, though the combination of declining revenue and surging profits raises significant window dressing concerns about the authenticity of pre-IPO financial performance.
• Financial Metrics: Impressive ROE of 34.92%, strong ROCE of 31.27%, elevated debt-to-equity ratio of 2.04, modest PAT margin of 2.64%, low EBITDA margin of 5.69%, alarming price-to-book value of 10.87x, and an estimated market capitalisation of ₹132.33 crore (significantly reduced from the pre-listing estimate due to the 20% discount).