Sampat Aluminium Makes Weak Debut with 5% Discount, Lists at ₹114 Despite Strong Subscription

Sampat Aluminium Limited, the aluminium wire rods manufacturer, made a disappointing debut on BSE SME on September 24, 2025. After closing its IPO bidding between September 17-19, 2025, the company commenced trading with a 5% discount at ₹114, below the issue price of ₹120, reflecting negative investor sentiment towards the aluminium manufacturing sector despite an exceptional subscription response.

Sampat Aluminium Listing Details

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Sampat Aluminium Limited launched its IPO at ₹120 per share with a minimum investment of 2,400 shares costing ₹2,88,000. The IPO received an outstanding response with a subscription of 169.09 times - retail investors at a strong 161.68 times, NII at exceptional 295.88 times, and QIB at a solid 87.02 times, indicating overwhelming investor enthusiasm during the IPO period despite the subsequent weak listing performance.

First-Day Trading Performance Outlook

Listing Price: Sampat Aluminium share price opened at ₹120, matching the issue price, but declined to ₹114, representing a discount of 5% from the issue price, delivering losses for investors despite strong subscription demand.
Growth Drivers and Challenges

Growth Drivers:

• Manufacturing Expertise: Established aluminium wire rods manufacturer using the advanced Properzi process for continuous casting and hot-rolling with an 8,400 MTPA capacity facility at Kalol, Gujarat, producing essential products for electricity distribution and industrial applications.
• Capacity Expansion Plans: IPO proceeds of ₹23.32 crore are allocated for setting up a new manufacturing facility at Borisana, Mehsana, in Gujarat, to support production capacity enhancement and geographical diversification.
• Strong Profitability Metrics: Impressive ROE of 42.42%, solid ROCE of 23.13%, healthy RoNW of 30.82%, and reasonable P/E of 10.12x, indicating efficient capital utilisation and attractive valuation metrics.
• Diversified Customer Base: Wide geographic presence with established supplier network and long-standing customer relationships providing business stability and growth opportunities in the aluminium products sector.

Challenges:

• Revenue Volatility: Revenue declined 11% to ₹133.00 crore in FY25 despite PAT growth of 5%, indicating inconsistent top-line performance and potential demand fluctuations in the aluminium sector.
• High Leverage Concerns: Debt-to-equity ratio of 1.05, indicating elevated financial leverage requiring careful debt management and potential strain on cash flows during business expansion.
• Commodity Price Sensitivity: The Aluminium manufacturing business is exposed to raw material price volatility, aluminium ingot costs, and metal market cycles affecting margin stability and profitability predictability.
• Market Reception Disconnect: A strong subscription response contrasts with poor listing performance, indicating potential concerns about overvaluation and investor scepticism regarding business fundamentals.

Utilisation of IPO Proceeds

• Manufacturing Expansion: ₹23.32 crore for setting up a new manufacturing facility at Borisana, Mehsana in Gujarat, enhancing production capacity and operational capabilities in aluminium wire rods manufacturing.
• General Corporate Purposes: Supporting business operations, working capital requirements, and strategic initiatives for long-term growth and competitiveness in the aluminium products market.

Financial Performance of Sampat Aluminium

• Revenue: ₹133.00 crore for FY25, showing a decline of 11% from ₹148.92 crore in FY24, reflecting challenging market conditions and demand fluctuations in the aluminium products sector.
• Net Profit: ₹6.93 crore in FY25, representing modest growth of 5% from ₹6.58 crore in FY24, indicating resilient profitability despite revenue pressures and operational challenges.
• Financial Metrics: Impressive ROE of 42.42%, solid ROCE of 23.13%, elevated debt-to-equity ratio of 1.05, modest PAT margin of 5.22%, healthy EBITDA margin of 8.70%, and estimated market capitalisation of ₹96.68 crore.