SKY Alloys and Power IPO: Company Files DRHP With SEBI, Plans to Use Proceeds for Debt Reduction and Capex

SKY Alloys and Power Limited has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), seeking to raise funds through a mainboard Initial Public Offering (SKY Alloys IPO) comprising a fresh issue of up to 1,60,84,000 equity shares and an Offer for Sale (OFS) of up to 18,07,000 shares by promoters. The total SKY Alloys IPO size is 1,78,91,000 equity shares. The equity shares are proposed to be listed on both the National Stock Exchange (NSE) and BSE. A key stated objective of the SKY Alloys IPO is the repayment or prepayment of the company’s existing borrowings, which stood at Rs 2,697.09 million (approximately Rs 269.7 crore) as of the date of the DRHP filing. The company plans to use a significant portion of the fresh issue proceeds for this purpose, alongside funding capital expenditure for its ongoing operations and expansion. Ankit Jaiswal, Senior Research Analyst at Univest notes that the SKY Alloys IPO DRHP represents an important opportunity for investors to gain exposure to an integrated steel manufacturer from Chhattisgarh with a growing renewable energy footprint.

The SKY Alloys IPO is a book-built offer being managed by Gretex Corporate Services Limited and Arihant Capital Markets Limited as Book Running Lead Managers, with MUFG Intime India Private Limited as the registrar. The price band, lot size, and opening/closing dates for the SKY Alloys IPO will be announced in consultation with the BRLMs after SEBI review and observations. The promoters of the company are Ravi Singhal, Sandeep Agrawal, and Nisha Singhal, with Ravi Singhal and Nisha Singhal participating in the OFS component. A pre-IPO placement of up to 32,00,000 shares is also possible ahead of the final Red Herring Prospectus filing, which would proportionally reduce the SKY Alloys IPO size.

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SKY Alloys IPO: Offer Structure at a Glance

Parameter	Details
Company	SKY Alloys and Power Limited
IPO Type	Mainboard book-built issue
Fresh Issue	Up to 1,60,84,000 equity shares
Offer for Sale (OFS)	Up to 18,07,000 equity shares (by promoters)
Total SKY Alloys IPO Size	1,78,91,000 equity shares
Pre-IPO Placement	Up to 32,00,000 shares (may reduce SKY Alloys IPO size)
Face Value	Rs 10 per share
Proposed Listing	NSE and BSE
Lead Managers	Gretex Corporate Services, Arihant Capital Markets
Registrar	MUFG Intime India Pvt. Ltd.
Promoters	Ravi Singhal, Sandeep Agrawal, Nisha Singhal

SKY Alloys IPO Proceeds: Debt Reduction and Expansion

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The primary stated use of proceeds from the SKY Alloys IPO fresh issue is the repayment or prepayment of existing borrowings. As of the date of the DRHP, SKY Alloys and Power had total borrowings of Rs 2,697.09 million (approximately Rs 269.7 crore), resulting in a debt-to-equity ratio of 1.24x. The SKY Alloys IPO proceeds are intended to meaningfully reduce this leverage, improving the company’s balance sheet and reducing interest cost burden going forward. A portion of the fresh issue proceeds will also fund capital expenditure, including the company’s ongoing development of a solar power project to offset grid electricity consumption for its manufacturing facility in Raigarh, Chhattisgarh. The OFS component of the SKY Alloys IPO will not result in any proceeds flowing to the company, with those funds going directly to the selling promoters.

SKY Alloys and Power: Business and Financials

Incorporated in 2009 and converted to a public limited company in 2022, SKY Alloys and Power Limited is an integrated steel manufacturer based in Raigarh, Chhattisgarh. The company’s product portfolio includes Sponge Iron (Direct Reduced Iron), Mild Steel Billets, Ferro-Alloys (including Silico Manganese), and its flagship branded product SKY TMT bars for the construction market. The manufacturing facility is equipped with captive power generation through Atmospheric Fluidised Bed Combustion (AFBC) and Waste Heat Recovery Boiler (WHRB) units, which reduce power costs and improve margin resilience. In the year ended March recently, SKY Alloys and Power reported revenue from operations of Rs 8,192.40 million (approximately Rs 819 crore), up 30.1% from the previous year. Profit After Tax (PAT) was Rs 530.46 million (approximately Rs 53 crore), up 17.9% year-on-year, supported by higher steel sales volumes and operational efficiencies. EBITDA margin was 13.46%, and Return on Equity was 27.83%. These are strong metrics for an SME-to-mainboard transition company in the steel sector, and the SKY Alloys IPO is being positioned as a growth and deleveraging story.

Conclusion: SKY Alloys IPO DRHP Filed

The SKY Alloys IPO DRHP filing with SEBI marks the first formal step in the public listing process for Sky Alloys and Power Limited. The company plans to use IPO proceeds primarily for debt repayment (reducing Rs 269.7 crore in borrowings) and capital expenditure, including a solar energy project. Revenue of Rs 819 crore, PAT of Rs 53 crore, EBITDA margin of 13.46%, and ROE of 27.83% are the key financial metrics to evaluate. Price band, lot size, and IPO dates will be announced after SEBI observations. Track the SKY Alloys IPO and all upcoming IPOs on Univest. Consult a SEBI-registered financial advisor before investing in any IPO.

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Frequently Asked Questions

What is the SKY Alloys IPO?

Ans. The SKY Alloys IPO is an Initial Public Offering by Sky Alloys and Power Limited, a steel manufacturer from Raigarh, Chhattisgarh. The company has filed its Draft Red Herring Prospectus (DRHP) with SEBI for a mainboard listing on both NSE and BSE. The SKY Alloys IPO comprises a fresh issue of 1.61 crore shares and an OFS of 0.18 crore shares by promoters, totalling 1.79 crore equity shares.

What will SKY Alloys IPO proceeds be used for?

Ans. The SKY Alloys IPO proceeds from the fresh issue will primarily be used for: (1) repayment or prepayment of existing borrowings (total borrowings Rs 269.7 crore, D/E ratio 1.24x); (2) capital expenditure including a solar power project to offset grid electricity consumption; and (3) general corporate purposes. The OFS proceeds of 18.07 lakh shares will go directly to the selling promoters (Ravi Singhal and Nisha Singhal) and not to the company.

What are SKY Alloys and Power’s financials?

Ans. SKY Alloys and Power financials for the year ended recently: Revenue from operations Rs 8,192.40 million (Rs 819 crore), up 30.1% YoY; PAT Rs 530.46 million (Rs 53 crore), up 17.9% YoY; EBITDA margin 13.46%; Return on Equity 27.83%; Debt-to-Equity ratio 1.24x; Net worth Rs 2,171.05 million. EPS was Rs 8.49 (basic and diluted).

What products does SKY Alloys and Power make?

Ans. SKY Alloys and Power Limited manufactures: (1) Sponge Iron (Direct Reduced Iron / DRI), an intermediate steel product; (2) Mild Steel (MS) Billets, for rolling mills and steel manufacturers; (3) Ferro-Alloys including Silico Manganese; and (4) SKY TMT bars, its branded construction steel product sold through dealers and agents. The company also operates captive power generation through AFBC and WHRB units and is developing a solar power project.

Who are SKY Alloys and Power’s promoters?

Ans. The promoters of SKY Alloys and Power Limited are Ravi Singhal, Sandeep Agrawal, and Nisha Singhal. In the SKY Alloys IPO OFS component, Ravi Singhal is selling up to 12,04,800 shares and Nisha Singhal is selling up to 6,02,200 shares. Sandeep Agrawal is not part of the OFS. The company was originally incorporated as a private limited company in 2009 and converted to a public company in 2022.

What are the risks in the SKY Alloys IPO?

Ans. Key risks disclosed in the SKY Alloys IPO DRHP include: (1) exposure to raw material and steel price fluctuations, which could impact operating margins significantly; (2) leverage risk with existing borrowings of Rs 269.7 crore, though IPO proceeds will partially address this; (3) certain tax proceedings and statutory non-compliance disclosures requiring resolution; (4) dependence on a dealer and agent-based distribution model for TMT bars without long-term agreements; and (5) sector risks from global and domestic steel price cycles.

When will the SKY Alloys IPO open?

Ans. The SKY Alloys IPO opening date, price band, and lot size have not yet been announced. These details will be disclosed after SEBI reviews the DRHP and issues its observations. Only after receiving SEBI clearance can the company file the Red Herring Prospectus and announce the IPO schedule. Investors interested in the SKY Alloys IPO should track updates on the NSE, BSE, and SEBI websites, or through the Univest Screener.

What is a DRHP filing?

Ans. A Draft Red Herring Prospectus (DRHP) is the preliminary document filed by a company with SEBI before launching an IPO. It contains the company’s business overview, financial statements, risk factors, IPO structure, and intended use of proceeds. The ‘Draft’ indicates it is not the final document, certain details like the exact price and lot size are not yet finalised. SEBI reviews the DRHP and issues observations within 30 days. Only after addressing SEBI’s comments can the company file the final Red Herring Prospectus and open the IPO for investor subscriptions.