Steel companies plan Rs 4,000 crore IPO amid hike in safeguard duties

Steel and steel-related companies are gearing up to mobilize around Rs 4,000 crore through initial public offerings over the next 12 to 18 months, buoyed by the government’s decision to impose a three-year safeguard duty on certain flat steel imports, merchant bankers said. The policy intervention follows a quiet year for steel IPOs in 2025, when only a few motherboards hit the market and several issues struggled to maintain post-listing performance.

The safeguard duty, which will take effect on April 21, 2025, is expected to improve short-term price visibility for domestic producers by raising the cost of imports and reducing price undercutting.According to industry insiders, the policy intervention will undoubtedly revive some fundraising plans that were previously postponed due to weak stock sentiment, weaker demand and continued import pressure.

“The safeguard obligation is expected to improve industry visibility and pricing discipline, which could help restore investor confidence. At the same time, companies that are well positioned in terms of cost efficiency, product diversification and balance sheet strength are likely to be better placed to access the capital markets as conditions stabilize,” said Sandeep Kumar, Managing Director of A-One Steels.

The IPO pipeline remains extensive, with more than a dozen steel and related companies at various stages of the listing process.

On the motherboard, several companies including AOne Steels India Ltd, Jindal Supreme (India) Ltd, Steel Infra Solutions Co. are preparing. Ltd., Rajputana Stainless Ltd., German Green Steel & Power Ltd., Renny Strips Ltd., RK Steel Manufacturing Co. Ltd and Karamtara Engineering Ltd are gearing up to tap the IPO market, investment bankers said. In the SME segment, companies including RP Multimetals Ltd, Elec Steel Processing Industries Ltd and Kasturi Metal Composite Ltd have received stock exchange approvals but are waiting for more favorable market conditions before launching their issues.

Collectively, these companies are expected to raise over Rs 4,000 crore from their initial public issues.

“The safeguard obligation has improved near-term pricing discipline and earnings visibility. This has encouraged several issuers with approvals in hand to revise capital market plans depending on broader market conditions. We estimate that steel and steel-related companies could collectively raise around Rs 4,000 crore through the IPO route over the next 12 to 18 months,” said Priyesh Shantilal Jain, director, Socradamus Capital.

Proceeds from the IPO are expected to be used for capacity expansion, entry into value-added steel segments, strengthening integration and reducing debt burden, said Deep Jain, Senior Manager at Mumbai-based investment banking firm Unistone Capital.

Some issuers are also expected to commit funds to green steel initiatives, aimed at improving ESG credentials and supporting long-term valuation reappraisal.

“Additionally, from a capital markets perspective, deal timing and valuations will be determined by earnings sustainability, balance sheet strength and post-tax visibility. Naturally, the indemnity obligation provides some support in the short term,” Jain added.

From a capital markets perspective, the safeguard obligation is seen as a boost to steelmakers in the short term, although industry participants emphasize that long-term sustainable valuations will depend on strong fundamentals.

Foreign broker Jefferies said in a recent note that clearer price trends and margin stability are especially important for investor confidence in cyclical sectors such as steel.

The brokerage firm also said that Indian steel companies could see volume growth of 6 to 9 percent CAGR (compound annual growth rate) over FY26-28, adding that the restoration of safeguard duty should further lift domestic steel prices and support regional spreads. PTI SP DR DR