Evonith Steel Group Plans Four-Fold Production Boost, Eyes ₹2,000 Crore IPO

Evonith Steel Group, a portfolio company of UK-based investment firm Nithia Capital, is set to embark on an aggressive expansion strategy to quadruple its steel production capacity to 6 million tonnes per annum. Currently producing 1.4 million tonnes, the company plans an immediate brownfield expansion to boost its Wadhwa, Maharashtra-based facility to 3.5 million tonnes over the next 2.5 to 3 years, requiring an investment of ₹5,500–6,000 crore. Beyond this, Evonith intends to reach the 6 million tonne target through inorganic expansion, primarily by acquiring and scaling up other steel assets, with a focus on the mineral-rich eastern regions of India.

To finance these significant growth plans, Evonith Steel Group plans to tap the primary market for fundraising, aiming to raise about ₹2,000 crore. This move positions the company to capitalize on India's accelerating demand for steel. The company, which was formed five years ago through the acquisition of Uttam Galva Metaliks and Uttam Value Steels via the insolvency process, has already demonstrated a turnaround, increasing production from 0.5 million tonnes to the current 1.4 million tonnes with a ₹1,500 crore investment in modernization.

Financial projections indicate strong growth, with revenue expected to rise to around ₹7,000 crore in FY26 from approximately ₹5,000 crore in FY25. Current EBITDA stands at ₹1,200 crore and is projected to reach ₹1,500 crore next year. Recently, CRISIL assigned a 'AA-' rating to the company’s long-term debt facility.

Impact: This expansion plan signifies a major step for Evonith Steel Group, potentially increasing its market share and competitiveness within India's steel sector. The substantial investment and fundraising indicate confidence in the Indian steel market's growth prospects. The company's success could influence supply dynamics and pricing in specific steel product segments. The planned IPO will offer investors a new opportunity in the industrial sector. Rating: 8/10.

Difficult Terms: * **Brownfield Expansion**: Expanding an existing industrial site or facility, rather than building a new one from scratch. This involves upgrading or adding to current infrastructure. * **Strategic Acquisitions**: Purchasing other companies that align with the acquiring company's long-term goals and strategy, aiming for synergistic benefits or market consolidation. * **Insolvency Process**: A legal procedure for companies that are unable to pay their debts. It can lead to restructuring of the company's debts or assets. * **Primary Market**: The market where securities are created and sold for the first time by companies to investors, such as through an Initial Public Offering (IPO). * **EBITDA**: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure used to gauge the profitability of a company's core operations. * **Flat Steels**: Steel products that are rolled into thin sheets or plates, commonly used in automotive, construction, and appliance manufacturing. * **Inorganic Expansion**: Growth achieved by acquiring or merging with other companies, as opposed to organic growth which comes from expanding existing operations.