VMS TMT shares reached 5% lower circuit after modest quotation profits. What should investors do?

The shares of newly mentioned company VST TMT reached their 5% lower circuit of RS 99.75 on the BSE in Intraday Trade today, after a premium of 6% compared to its IPO price of RS 105.

On the NSE, VST TMT shares mentioned on RS 104.90, which marks a premium of 5.96% compared to the IPO price of RS 99.

What should an investor do with this decline?

VST TMT is located in the steel/metal sector and the production of thermo mechanically treated (TMT) bars used for the construction. The activities are highly concentrated in Gujarat, with more than 98% of the state of the state in recent years. “The company is in a cyclical, capital -intensive sector with considerable leverage and concentrated geography,” notes Shivani Nyati, head of wealth at Swastika Investmart. She added: “The list offers a moderate benefit, but also exposes investors to the downward risk. Investors can consider making early profit early and keeping the rest with a stop loss of RS 90.”

Furthermore, Brokeragebedrijf Master Capital Services said that the list of VST TMT at a modest 6% premium compared to the IPO price indicates a good, non-exuberant, indication-especially compared to ultra-high subscription figures of more than 102 times.

“The issue, fully formed as a new issue and intended to finance debt reduction and general business purposes, is a positive sign because it strengthens the balance and improves financial flexibility. In the phase after the list, the company must focus on stable sales growth and profitability through good use of IPO funds,” noted the broker.

The emphasis of debt reduction -initiatives will also be crucial in mobilizing the trust of investors, because a slimmer, stronger balance increases the return ratios.

In addition, Master Capital noted that expanding the distribution network outside of Gujarat and strengthening the dominance in the ultra-competitive TMT rod segment can serve as a long-term growth company.

“Investors can remain in a rejection and viewing mode, with share performance probably depending on how VST TMT achieves operational efficiency and increases market dominance,” Master Capital Services advised.

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((Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)