Why Did VMS TMT's Net Profit Drop by 17% in FY24?
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Synopsis
VMS TMT's recent financial report reveals a concerning trend as its net profit has fallen significantly. With an IPO on the horizon and plans to utilize funds for debt repayment, the company is navigating a challenging market landscape. What does this mean for investors and the steel industry?
Key Takeaways
- VMS TMT's net profit fell by 17.5% in FY24.
- Revenue decreased by 1% to Rs 872.95 crore.
- The IPO will consist of 1.5 crore equity shares.
- 50% of shares are reserved for retail investors.
- The IPO will open on September 17.
Mumbai, Sep 12 (NationPress) VMS TMT Limited, a steel bar manufacturer located in Gujarat, has disclosed a significant decline in its net profit for the fiscal year concluding on March 31, 2024. The company's profit plummeted by 17.5 percent, amounting to Rs 11.11 crore, down from Rs 13.46 crore reported in the previous year, according to its latest financial report.
The red herring prospectus (RHP) reveals that VMS TMT achieved Rs 872.95 crore in revenue, a decrease of 1 percent compared to Rs 882.01 crore from the prior year. Additionally, total income fell by 1 percent to Rs 873.16 crore, down from Rs 882.05 crore in the last financial year.
VMS TMT, known for producing thermo-mechanically treated (TMT) steel bars under the Kamdhenu brand, has submitted its RHP to the Registrar of Companies and is poised to initiate its IPO on September 17.
The offering will be composed entirely of a new issue of 1.5 crore equity shares, with all proceeds directed to the company.
Institutional investors will get access to the IPO anchor book starting on September 16, and the subscription will close on September 19.
The company intends to allocate Rs 115 crore from the IPO proceeds for repaying debts, while the remainder will be designated for general corporate uses.
As of June, VMS TMT's total borrowings amounted to Rs 261.7 crore. The issue structure allocates 50 percent of shares for retail investors, 30 percent for qualified institutional buyers, and the remaining 20 percent for non-institutional investors.
Operating mainly in Gujarat, VMS TMT manufactures TMT bars from scrap and billets at its plant in Bhayla Village, Ahmedabad, which has a production capacity of two lakh metric tonnes annually.
The company’s IPO allotment is expected to be finalized by September 22, with a planned listing on the stock exchanges on September 24.
Earlier, VMS TMT had submitted draft IPO papers to SEBI on March 27, which received clearance on July 21. Arihant Capital Markets is serving as the sole book-running lead manager for this issue.
Point of View
VMS TMT's substantial profit decline highlights the broader challenges faced by the steel manufacturing sector. As the company prepares for its IPO, stakeholders must weigh the implications of its financial performance against market conditions. Transparency and strategic financial management will be crucial for VMS TMT to regain investor confidence and sustain growth.
NationPress
21/09/2025
Frequently Asked Questions
What caused the decline in VMS TMT's profit?
The decline in VMS TMT's profit can be attributed to various market factors, including increased competition and fluctuating raw material costs.
When is VMS TMT's IPO scheduled?
VMS TMT's IPO is scheduled to open on September 17 and will close for subscription on September 19.
What will VMS TMT do with the IPO proceeds?
VMS TMT plans to use Rs 115 crore from the IPO proceeds to repay borrowings, with the remainder allocated for general corporate purposes.
