By: Habib Metropolitan Financial Services Limited

Amreli Steels Limited (AMSL) started its operations  in 1973 under the umbrella of Amreli‐ wala hardware Industries. AMSL were first ones to introduce deformed steel bars in Paki‐ stan and later on brought earthquake resistant bars in the country.

After converting into Amreli Steels Ltd in 1991, they are the largest manufacturer of steel reinforcement bars in the country. Presently, AMSL re‐rolling plant is located at SITE along with a steel melting plant in Dhabeji, Karachi.

Transaction Structure Company plans to increase its capacity with an estimated cost of PKR3.38bn at their two sites through IPO proceeds. The planned expansion is in twofold which includes 1) In‐ crease in re‐rolling mills capacity from 180,000 tons to 480,000 tons and 2) Steel melting capacity from 200,000 tons to 350,000 tons. AMSL plans to issue 74.25mn shares which include a book building portion of 55.5mn shares (75%) scheduled from October 7, 2015 to October 8, 2015 and 18.75mn shares (25%) offered to general public from 27‐29 Octo‐ ber’15 at the floor price of PKR24/share. It is pertinent to note that the remaining PKR1.54bn financing has been secured from UBL and AKBL.

However, at the price of approx PKR45.39/share, the entire cost of expansion can be funded through equity, hence saving on interest payments.

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According to Management estimates, company bottomline is expected to witness a six year CGAR of 33% to PKR4.89bn.