India’s steel sector gears up for primary market boom in coming months

Mumbai: India’s steel sector is poised for a fresh burst of primary market activity, with at least 10 steel producers and steel-related companies preparing to raise ₹5,000-7,000 crore in total through initial public offerings over the next eight to 10 months.

Steel Infra Solutions Company Ltd, German Green Steel & Power Ltd, Rajputana Stainless Ltd, Bombay Coated Steel Ltd, A-One Steels India Ltd, Jindal Supreme (India) Ltd, Madhur Iron & Steel Ltd, and Synergy Advanced Metals Ltd are among those who have filed draft red herring prospectuses (DRHPs), while a few others are in advanced stages of preparation, according to investment bankers.

The steel industry’s rush to tap the capital markets comes amid improving demand visibility and supportive policy measures.

“India’s steel demand is expected to grow due to infrastructure push for roads, railways, ports, recovery in the steel sector, the PLI scheme for manufacturing, and the government’s continued focus on capex,” said Uday Patil, executive director at PL Capital Markets.

He added that about 25-30% of steel demand is linked to government projects and that safeguard and anti-dumping duties on select imports have helped domestic producers compete on a more level-playing field.

Local companies are targeting significant capacity expansions under the government’s long-term steel policy, aiming to capture the next leg of growth. Mid-sized processors and specialty steel makers, particularly those in coated steel, stainless products, and specialty alloys, are seeing improved order visibility from infrastructure, renewables, railways, metro projects, auto and engineering sectors.
“There is a clear capacity build-out cycle underway among mid-tier players who want to capture domestic demand growth and reduce import dependence in certain product categories,” said Deep Shah, senior manager at Unistone Capital, an investment banking firm. IPO proceeds are expected to be deployed towards greenfield lines, galvanising units, colour-coating facilities and stainless capacity additions. Besides expansion, companies are also looking to strengthen financial profiles, Shah said. After a prolonged deleveraging phase over the past decade, many steel companies are using favourable equity market conditions to further clean up their balance sheets. Lower leverage can improve return ratios, reduce interest burden, enhance credit ratings, and support future borrowing at better terms.

Given the working capital-intensive nature of the steel trade, a portion of the IPO proceeds is also likely to be earmarked for liquidity support to meet capacity expansions.

Bankers also flagged sectorspecific risks such as volatility in steel prices, swings in coking coal costs, import competition, global demand slowdown, and currency movements affecting exports. Margin sustainability will be closely monitored, particularly if raw material costs remain elevated. Yet market participants argue that the narrative around steel is gradually evolving. “India’s steel industry is not viewed purely as a commodity story but as a structural growth play backed by consumption from infrastructure, renewables, railways and urban development.” said Amogh Giridhar, associate partner at Prequate Advisory, adding that investors are becoming comfortable underwriting cyclical businesses where there is evidence of prudent leverage and disciplined capex plans.

However, bankers believe the real test in public markets would always be balance sheet quality and capital allocation discipline for a historically — volatile industry. “Those with clear integration strategies and export competitiveness, coupled with strong domestic consumption may be able to command premium valuations despite the cyclical backdrop,” said Giridhar.