The Indian steel and iron industry continues to attract significant investor attention, and the upcoming Shri Hare Krishna Sponge Iron IPO represents an intriguing opportunity in the small and medium enterprise (SME) segment. This Chhattisgarh-based sponge iron manufacturer is preparing to make its debut on the NSE SME platform with a public offering worth ₹29.91 crores, scheduled to open for subscription from June 24 to June 26, 2025. The total minimum investment is Rs. 1,18,000 along with a share price Rs. 56-59.
Established in May 2003, Shri Hare Krishna Sponge Iron Limited has been quietly building its presence in the steel raw materials sector, operating from a strategically located manufacturing facility in Siltara, Raipur. The company’s decision to go public comes at a time when the Indian steel industry is experiencing both opportunities and challenges, making this IPO particularly noteworthy for investors seeking exposure to the metals and mining sector through SME investments.
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Understanding Shri Hare Krishna Sponge Iron IPO Details
The Shri Hare Krishna Sponge Iron IPO represents a fresh issue of 50.70 lakh equity shares, with each share carrying a face value of ₹10. The company has set an attractive price band ranging from ₹56 to ₹59 per share, positioning itself competitively within the SME IPO space. This pricing strategy reflects the management’s confidence in the company’s value proposition while ensuring accessibility for retail investors looking to participate in the steel sector’s growth story.
The IPO structure follows the standard bookbuilding process, with Hem Securities Limited serving as the book-running lead manager and Kfin Technologies Limited acting as the registrar. The market maker role has been assigned to Hem Finlease Private Limited, ensuring adequate liquidity support post-listing. The minimum lot size has been set at 2,000 shares, requiring a minimum investment of ₹1,18,000 for retail investors, while high net worth individuals need to invest a minimum of ₹2,36,000 for two lots.
Company Business Model and Operations Analysis
Shri Hare Krishna Sponge Iron Limited operates in the crucial sponge iron manufacturing segment, producing a key raw material essential for steel production in both induction and electric arc furnaces. The company’s manufacturing facility spans 13.45 acres in Siltara, Raipur, with an impressive annual production capacity of 30,000 metric tonnes. This strategic location in Chhattisgarh provides the company with proximity to iron ore mines and coal reserves, essential inputs for sponge iron production.
The company has demonstrated its commitment to quality and operational excellence by obtaining multiple ISO certifications, including ISO 9001:2015 for quality management, ISO 14001:2015 for environmental management, and ISO 45001:2018 for occupational health and safety management. These certifications not only validate the company’s operational standards but also position it favorably with quality-conscious customers across Maharashtra, Madhya Pradesh, and Chhattisgarh, where it currently markets its products.
With 92 full-time employees as of April 2025, the company maintains a lean operational structure while ensuring adequate workforce for its current production capacity. The management’s focus on operational efficiency is evident in their systematic approach to expanding market reach while maintaining quality standards across all operations.
Financial Performance and Investment Metrics
The financial performance of Shri Hare Krishna Sponge Iron reveals a mixed picture that potential investors must carefully evaluate. For the financial year ending March 31, 2025, the company reported revenue of ₹83.60 crores, representing a 2% decline from the previous year’s ₹84.93 crores. This revenue contraction, coupled with a 10% drop in profit after tax from ₹10.17 crores to ₹9.20 crores, indicates some operational challenges that the company has been navigating.
Despite the recent performance dip, the company maintains healthy profitability metrics with a PAT margin of 11.43% and EBITDA margin of 13.40%. The return on equity stands at 13.33%, while return on capital employed is 14.70%, suggesting efficient capital utilization despite the recent headwinds. The company’s debt-to-equity ratio of 0.15 indicates conservative financial management with minimal leverage, though total borrowings increased from ₹7.24 crores to ₹11.39 crores year-on-year.
The post-IPO market capitalization is expected to reach ₹113.23 crores, with the earnings per share declining from ₹6.51 pre-IPO to ₹4.79 post-IPO due to dilution. The corresponding price-to-earnings ratio will increase from 9.06 to 12.31, which appears reasonable for an SME in the metals sector, though investors should consider the recent financial performance trends.
IPO Fund Utilization and Growth Strategy
The primary objective of this IPO is to fund the company’s strategic expansion through the establishment of a captive power plant at their Siltara facility. Out of the net proceeds of ₹29.91 crores, ₹23 crores will be allocated toward this crucial infrastructure development, while the remaining funds are earmarked for general corporate purposes. This capital allocation strategy addresses one of the company’s most significant operational challenges – power shortage and high electricity costs that have impacted profitability.
The decision to invest in captive power generation demonstrates management’s long-term vision and commitment to operational efficiency. Sponge iron manufacturing is energy-intensive, and securing reliable, cost-effective power supply can significantly improve margins and production consistency. This strategic move could potentially transform the company’s cost structure and competitive position in the medium to long term.
The investment in captive power infrastructure also aligns with the broader trend in Indian manufacturing, where companies are increasingly focusing on energy security and cost optimization. For Shri Hare Krishna Sponge Iron, this investment could provide a sustainable competitive advantage, especially given the energy-intensive nature of their operations.
Market Position and Competitive Landscape
Shri Hare Krishna Sponge Iron operates in India’s robust sponge iron industry, which serves as a critical link in the steel value chain. The company’s geographic presence across Maharashtra, Madhya Pradesh, and Chhattisgarh positions it well within key steel-consuming regions of India. This strategic market positioning allows the company to serve both large integrated steel plants and smaller induction furnace operators who rely on sponge iron as their primary raw material.
The Indian sponge iron industry benefits from the country’s abundant iron ore reserves and growing steel demand driven by infrastructure development and urbanization. However, the sector also faces challenges including environmental regulations, power costs, and raw material price volatility. Shri Hare Krishna’s planned investment in captive power generation directly addresses one of these key challenges, potentially improving its competitive position.
The company’s focus on quality certifications and operational excellence provides differentiation in a market where product consistency and reliability are crucial for customer retention. The management’s experience of over two decades in the industry, combined with their systematic approach to capacity expansion and infrastructure development, suggests a mature understanding of market dynamics and operational requirements.
| IPO Key Details | Specifications |
|---|---|
| Issue Size | ₹29.91 Crores |
| Share Offer | 50,70,000 shares |
| Price Band | ₹56 – ₹59 per share |
| Minimum Lot Size | 2,000 shares |
| Minimum Investment (Retail) | ₹1,18,000 |
| Minimum Investment (HNI) | ₹2,36,000 |
| IPO Dates | June 24-26, 2025 |
| Listing Date | July 1, 2025 (Tentative) |
| Listing Exchange | NSE SME |
| Financial Highlights (₹ Crores) | FY 2025 | FY 2024 | Change |
|---|---|---|---|
| Revenue | 83.60 | 84.93 | -2% |
| EBITDA | 10.78 | 12.11 | -11% |
| Profit After Tax | 9.20 | 10.17 | -10% |
| Net Worth | 73.59 | 64.39 | +14% |
| ROE | 13.33% | – | – |
| ROCE | 14.70% | – | – |
Read More: Oswal Pumps Share Price: Stock Lists at 3% Premium After Successful IPO on NSE and BSE
Frequently Asked Questions
Q1: What is the minimum investment required for Shri Hare Krishna Sponge Iron IPO?
The minimum investment for retail investors is ₹1,18,000, which covers one lot of 2,000 shares at the upper price band of ₹59 per share. High net worth individuals need to invest a minimum of ₹2,36,000 for two lots (4,000 shares). Retail investors can apply for only one lot, while HNIs can apply for multiple lots. The lot size of 2,000 shares is standard for SME IPOs and ensures meaningful participation while keeping the investment accessible to retail investors.
Q2: Should I invest in Shri Hare Krishna Sponge Iron IPO given the recent decline in financial performance?
The investment decision should consider both risks and opportunities. While the company has experienced a 2% revenue decline and 10% profit drop in FY2025, the planned investment in captive power generation could address key operational challenges. The company maintains healthy margins (11.43% PAT margin) and strong return ratios (13.33% ROE). However, given the recent performance decline and the inherent risks in SME investments, conservative investors might consider waiting for post-listing performance or exploring other opportunities. Risk-tolerant investors who believe in the turnaround potential might consider participation, but should limit exposure and diversify their portfolio appropriately.
