Steel firms line up Rs 4,000 crore IPOs as safeguard duty lifts sector outlook

Steel and steel-linked companies are preparing to raise around Rs 4,000 crore through initial public offerings over the next 12–18 months, encouraged by the government’s decision to impose a three-year safeguard duty on select flat steel imports, merchant bankers said.

The policy move comes after a muted year for steel IPOs in 2025, when only a handful of mainboard listings reached the market and several struggled to sustain post-listing performance.

The safeguard duty, which came into effect on April 21, 2025, is expected to improve near-term pricing visibility for domestic producers by increasing the landed cost of imports and curbing price undercutting.

Industry executives said the measure is likely to revive fundraising plans that were earlier put on hold due to weak equity market sentiment, softer demand and sustained pressure from imports.

“Safeguard duty is expected to improve sector visibility and pricing discipline, which can help restore investor confidence. At the same time, companies that are well-positioned on cost efficiency, product diversification and balance-sheet strength are likely to be better placed to access capital markets as conditions stabilise,” said Sandeep Kumar, Managing Director, A-One Steels.

The IPO pipeline remains sizeable, with more than a dozen steel and allied companies at various stages of the listing process.

On the mainboard, companies preparing to tap the market include AOne Steels India Ltd, Jindal Supreme (India) Ltd, Steel Infra Solutions Co. Ltd, Rajputana Stainless Ltd, German Green Steel & Power Ltd, Renny Strips Ltd, R.K. Steel Manufacturing Co. Ltd and Karamtara Engineering Ltd, according to merchant bankers.

In the SME segment, firms such as R.P. Multimetals Ltd, Elec Steel Processing Industries Ltd and Kasturi Metal Composite Ltd have received exchange approvals but are waiting for more favourable market conditions before launching their issues.

Together, these companies are expected to mobilise more than Rs 4,000 crore through their maiden public offerings.

“The safeguard duty has improved near-term pricing discipline and earnings visibility and this is encouraging several issuers with approvals in hand to revisit capital market plans, subject to broader market conditions. We estimate that steel and steel-linked companies could collectively raise around Rs 4,000 crore through the IPO route over the next 12–18 months,” said Priyesh Shantilal Jain, Director, Socradamus Capital.

IPO proceeds are expected to be used for capacity expansion, entry into value-added steel segments, strengthening integration and reducing leverage, said Deep Jain, Senior Manager at Mumbai-based investment banking firm Unistone Capital.

Some issuers are also likely to allocate funds towards green steel initiatives to improve ESG credentials and support long-term valuation re-rating.

“Moreover from a capital markets perspective, deal timing and valuations will continue to be driven by earnings sustainability, balance-sheet strength and visibility beyond the duty period. Of course, safeguard duty provides some near-term support,” Jain added.

Market participants said the safeguard duty offers a near-term tailwind for steelmakers, but stressed that sustainable valuations will depend on strong fundamentals over the longer term.

Foreign brokerage Jefferies said in a recent note that clearer pricing trends and margin stability are critical for investor confidence in cyclical sectors such as steel.

The brokerage added that Indian steel companies could see volume growth of 6–9 per cent CAGR over FY26–28, noting that the reinstatement of the safeguard duty should further lift domestic steel prices and support regional spreads.

(With inputs from agencies)