Electrosteel Steels IPO Opens Today

MUMBAI, INDIA (GaeaTimes.com)- The month of September is seeing one IPO after next with 13 companies having their IPO’s this month. This week is the busiest for IPO market in fifteen years. The IPO of Electrosteel Steels has opened today along with the IPOs of two other companies. The company, a subsidiary of Electrosteel Group, has a price band of Rs 10-11 per share for its public issue of 225.52 million equity share. The public issue for Electrosteel Steel will close on Friday Sep 24, 2010. Angel Broking has asked people to subscribe to the IPO with a long term objective. The encouragement by Angel Broking is based on the following observations.

Electrosteel Steels is advantageous in the long run as ESL is setting up a greenfield steel plant in the bakora district of Jharkhand. The greenfield steel plant is being set up in collaboration with Stemcor Mesa DMCC and is supposed to start production next month. Secondly, the company has no problems of raw materials as it has made necessary arrangements and agreements thereby the fluctuations in cost production is expected to be minimum. Thirdly, the agreement with Stemcor Mesa DMCC will be beneficial for the company as Stemcor Messa happens to be the worlds largest steel trader. These reasons should be considered while subscribing to Electrosteel Steels IPO.

The Indian investors do not seem to have much appetite right now with so many IPOs happening this month. As for the Electrosteel Steels IPO it is presenting a unique opportunity as it is offering shares of face value Rs 10 at Rs 10. The company is being promoted by Electrosteel Castings Ltd. which is the largest ductile iron pipe maker in the country. However, this is also true that the company has stiff competition and there are reports that about 61 litigations are there on the company’s promoter group.