On the first day of book-building, International Steels Limited (ISL) has received bids for 81 million shares against its offer of 61.9 million shares. This is the first public offering at the Karachi bourse after 12 months. The company has offered 61.9 million shares (14 percent of capital) through book building between April 12-14 to institutions and high-net worth individuals at a floor price of Rs 12.9.
As many as 20.6 million shares (4.7 percent of capital) have been allocated for pre-IPO foreign investors and 27.5 million (6.3 percent of capital) will be given to general public later at a strike price. "The 250,000 tons state-of-the-art Rs 8.7 billion steel complex is the first of its kind in Pakistan, which envisioned to sell 100,000 tons of CRC (Colled Rolled Coils) and 150,000 of HDGC (Hot Dipped Galvanised Coils) to the supply deficit domestic market," Farhan Mahmood, senior analyst at Topline Securities said.
He said with one of the lowest per capita steel consumption of 12kgs versus regional average of 190kgs, Pakistan steel market offers huge potential. Moreover, the prevalent estimated supply shortfall of 400,000 and 300,000 tons of CRC and HDGC respectively, acts like an assured demand for the company's product despite 220,000 tons capacity addition likely by Ayesha Steels in next few years. In addition to the stable demand, the company sponsors' long association with local steel market further augments the company's unique proposition. "Stemming from various valuation methodologies including PE, P/BV and DCF, we derive a target price of Rs 16.5 for ISL," Farhan said.
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