Nilachal Carbo Metalicks Makes Weak Debut with 20% Discount, Opens at ₹68 Against Lukewarm Subscription

Nilachal Carbo Metalicks Limited, the metallurgical coke manufacturer, made a disappointing debut on BSE SME on September 16, 2025. After closing its IPO bidding between September 8-11, 2025, the company commenced trading with a 20% discount at ₹68, significantly below the issue price of ₹85, reflecting weak investor sentiment towards the metallurgical coke sector amid challenging market conditions.

Nilachal Carbo Metalicks Listing Details

Nilachal Carbo Metalicks Limited launched its fixed price IPO at ₹85 per share with a minimum investment of 3,200 shares costing ₹2,72,000. The IPO received a modest response with a subscription of 5.06 times - retail investors at 5.55 times and NII at 4.56 times, indicating lukewarm investor interest with limited institutional participation in the metallurgical coke manufacturing business.

First-Day Trading Performance Outlook

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• Listing Price: Nilachal Carbo Metalicks share price opened at ₹68 on BSE SME, representing a discount of 20% from the issue price of ₹85, delivering losses for investors and reflecting negative market sentiment towards the coke manufacturing sector.

Growth Drivers and Challenges

Growth Drivers:

• Strategic Location Advantage: Manufacturing facility located in Chadheidhara, Jajpur, Odisha, providing proximity to raw material sources and steel industry clusters with an established customer base for efficient supply chain management.
• Production Capacity Expansion: Current capacity of 60,000 MTPA with planned addition of a 36-oven battery at the Baramana facility, increasing LAM Coke capacity to 94,400 MTPA, supporting business growth and market penetration.
• Diversified Product Portfolio: Comprehensive range including foundry grade coke, ferro alloys grade LAM coke, blast furnace grade coke, and coke fines, catering to multiple industrial applications and reducing customer concentration risk.
• Operational Efficiency: Own fleet for just-in-time delivery, flexible operations for customer-specific requirements, and established relationships with ferro chrome and alloy sector corporates, providing competitive advantages.

Challenges:

• Revenue Decline Trend: Revenue dropped 24% to ₹202.79 crore in FY25, with PAT declining 11% to ₹14.02 crore, indicating challenging market conditions and competitive pressures affecting business performance.
• Cyclical Industry Exposure: The Metallurgical coke business is highly dependent on steel industry cycles, commodity price fluctuations, and infrastructure spending patterns, affecting demand predictability and pricing power.
• Weak Market Reception: Negative listing performance with a 20% discount and modest subscription, indicating investor scepticism about valuation, business prospects, and sector fundamentals in the current market environment.
• Regulatory Policy Risks: Government policy changes affecting coke manufacturing and environmental regulations could impact operations, compliance costs, and business sustainability, requiring continuous adaptation.

Utilisation of IPO Proceeds

• Capacity Expansion: ₹134.6 million for funding capital expenditure towards installing one coke oven plant for capacity expansion, enhancing production capabilities and market reach.
• Plant Modernisation: ₹30.33 million for the modernisation of the existing plant, improving operational efficiency, product quality, and environmental compliance standards.
• General Corporate Purposes: Supporting business operations, working capital requirements, and strategic initiatives for long-term growth and competitiveness.

Financial Performance of Nilachal Carbo Metalicks

• Revenue: ₹202.79 crore for FY25, showing a decline of 24% from ₹267.13 crore in FY24, reflecting challenging market conditions and reduced demand in the metallurgical coke sector.
• Net Profit: ₹14.02 crore in FY25, representing a decline of 11% from ₹15.82 crore in FY24, indicating margin pressure and operational challenges amid market headwinds.
• Financial Metrics: Moderate ROE of 17.90%, solid ROCE of 22.74%, conservative debt-to-equity ratio of 0.30, decent PAT margin of 6.96%, healthy EBITDA margin of 13.46%, and estimated market capitalisation of ₹211.88 crore.