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State-owned alloy maker Midhani seeks $260 mn valuation via IPO
Photo Credit: Reuters

State-owned alloy maker Mishra Dhatu Nigam Ltd (Midhani) is seeking a valuation of Rs 1,686 crore ($260 million) through its upcoming initial public offering, as calculated at the upper end of the IPO’s per-share price band.

The government has set a per-share price band of Rs 87-90 apiece, resulting in an IPO size of Rs 438.37 crore at the upper end of the range just mentioned, the company said on Wednesday.

Retail investors and eligible employees will get Rs 3 discount on the price at which the shares are allotted.

The IPO opens next Wednesday and closes two days later. The offer involves sale of nearly 48.71 million shares, or 26% stake, by the government in the company.

If the government succeeds in selling 26% stake, the company automatically complies with the minimum public holding norm of 25% after its IPO.

Midhani joins state-run Bharat Dynamics Ltd in going to the market. Defence equipment maker Bharat Dynamics Ltd’s three-day IPO launched on Tuesday almost touched the one-third subscription mark on the first day of bidding, led by institutional demand.

State-run aerospace and defence firm Hindustan Aeronautics Ltd seeks a valuation of Rs 41,464 crore ($6.4 billion) through its initial public offering that opens on Friday and closes five days later.

Midhani and its IPO

Merchant bankers SBI Capital Markets and IDBI Capital are managing the IPO.

The company had filed for IPO in January, and got a nod a month later.

The firm makes special steel and super alloys, besides being the only maker of titanium alloys in India. Its products have applications in defence, aerospace, power generation, nuclear and other general engineering industries.

Proceeds from the Midhani IPO could go to help the government meet the fiscal deficit target for the current financial year, which has been revised from 3.2% to 3.5% of gross domestic product as a consequence of higher government spending.

VCCircle had previously reported that the government was the biggest beneficiary from the IPO boom in 2017. The government took four state-run companies public, raising about Rs 21,118 crore, besides selling stakes in already listed firms.

Midhani was established in 1973 to help India achieve self-reliance in alloys of strategic importance.

Its manufacturing facility is in Hyderabad. It is establishing one facility each in Rohtak (Haryana) and Nellore (Andhra Pradesh).

Midhani reported a net profit of Rs 27.30 crore for six months that ended on September-end 2017 and revenue (from operations) of Rs 208.06 crore for the same period.

The company’s revenue from operations stood at Rs 809.70 crore for 2016-17 and Rs 761.44 crore for 2015-16.

As on 31 January 2018, the company had an order book of Rs 517 crore, including defence orders worth Rs 283 crore and aerospace orders worth Rs 168 crore.

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