Shri Hare-Krishna Sponge Iron Makes Decent Debut, Lists 10% Above IPO Price

Shri Hare-Krishna Sponge Iron IPO Listing

The sponge iron manufacturing specialist, Shri Hare-Krishna Sponge Iron Limited, made a decent debut on the NSE SME platform on July 1, 2025. After closing its IPO bidding between June 24 - June 26, 2025, the company commenced trading with a solid 10.17% premium to its issue price, delivering satisfactory returns to investors despite concerns over declining financial performance. This book-building IPO raised ₹29.91 crore with a subscription of 6.84 times, reflecting moderate investor confidence in the steel sector as the company seeks to establish captive power generation capabilities to address operational challenges and improve cost competitiveness in the sponge iron manufacturing business.

Shri Hare-Krishna Sponge Iron Listing Details

Shri Hare-Krishna Sponge Iron Limited launched its IPO at ₹59 per share with minimum investment of 2,000 shares costing ₹1,18,000. The IPO received moderate response with subscription of 6.84 times - QIB segment leading at 10.97 times, NII at 10.09 times, and retail at 3.10 times, demonstrating mixed investor sentiment across categories. The share price listed at ₹64.80 on NSE SME, delivering a decent 10.17% premium from the issue price of ₹59, subsequently trading at ₹65.00 showing continued positive momentum in early trading.

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Listing Price: The Shri Hare-Krishna Sponge Iron share price opened at ₹64.80 on NSE SME on July 1, 2025, representing a premium of 10.17% from the issue price of ₹59, delivering decent gains for investors despite operational challenges.

First-Day Trading Performance Outlook

Shri Hare-Krishna Sponge Iron delivered satisfactory debut performance, opening above issue price despite declining financial metrics, reflecting investor confidence in the company's captive power plant initiative. The company, incorporated in 2003, specialises in sponge iron manufacturing with a 30,000 metric tonnes annual capacity facility in Siltara-Raipur, Chhattisgarh, covering 13.45 acres and serving customers across Maharashtra, Madhya Pradesh, and Chhattisgarh with ISO certifications for quality, environment, and safety management.

Growth Drivers and Challenges

Growth Drivers:

• Captive Power Initiative: Setting up captive power plant to address power shortage issues and reduce operational costs, improving competitiveness
• Strategic Location: Manufacturing facility in Chhattisgarh provides proximity to raw materials and key markets in central India
• Quality Certifications: ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certifications ensuring standardised quality and operational excellence
• Established Customer Base: Long-standing relationships with customers across Maharashtra, Madhya Pradesh, and Chhattisgarh regions

Challenges:

• Declining Performance: Revenue decrease of 2% and PAT drop of 10% in FY25 indicating operational challenges and market pressures
• Power Cost Issues: Company suffers from power shortage and higher power costs affecting operational efficiency and profitability margins
• Market Competition: Operating in competitive sponge iron market with established players and pricing pressures affecting margins
• Analyst Recommendation: Reviewer suggests avoiding the issue due to fully priced offer with declining financial performance

Utilisation of IPO Proceeds

• Captive Power Plant: ₹23.00 crore for funding capital expenditure requirements towards setup of captive power plant at Siltara-Raipur facility
• General Corporate Purposes: Remaining funds for general corporate purposes and operational requirements

Financial Performance of Shri Hare-Krishna Sponge Iron

• Revenue: ₹83.60 crore for FY25, showing marginal 2% decline from ₹84.93 crore in FY24, reflecting market challenges and operational issues
• Net Profit: ₹9.20 crore in FY25, demonstrating 10% decline from ₹10.17 crore in FY24, indicating margin pressure and operational challenges affecting profitability
• Financial Metrics: Moderate ROE of 13.33%, ROCE of 14.70%, low debt-to-equity ratio of 0.15, healthy PAT margin of 11.43%, and EBITDA margin of 13.40%, though declining trends warrant caution

Shri Hare-Krishna Sponge Iron's decent listing performance with a 10.17% premium reflects moderate investor confidence in the company's captive power initiative despite declining financial metrics. Whilst the company faces challenges including revenue decline, power cost issues, and competitive market dynamics, its strategic location, quality certifications, and planned captive power plant provide potential for operational improvements and cost reduction in the sponge iron manufacturing sector.