German Green Steel IPO: ₹80 Cr profit. ₹112.65 Cr in disputed tax demands. And a 48.5% discount to its pre-IPO funding price.
The ₹303.9 Cr IPO closes today, 29 September 2026, at ₹139. Listing: 5 October.
The bull case
Revenue: ₹1,130 Cr → ₹1,679 Cr in two years. PAT: ₹41.7 Cr → ₹79.9 Cr. EBITDA margin expanded from 7% to 9.9%. FY26 operating cash flow hit ₹141 Cr.
The risk case
- Tax: ₹112.65 Cr under appeal, equal to 26.6% of FY26 net worth. The final outcome remains uncertain.
- Concentration: 97.7% of FY26 revenue came from Gujarat.
- Debt: ₹334 Cr in borrowings. Just ₹7.7 Cr of IPO proceeds is earmarked for repayment.
- The price gap: a September 2025 pre-IPO placement at ₹270 per share. IPO price: ₹139. That is a 48.5% discount.
- Trademark dispute: cease-and-desist notices involving the TMX/Thermex trademarks and the GERMAN TMX name remain a disclosed risk.
My take
Growth and cash generation are encouraging. But the tax exposure, geographic concentration and expansion funding needs deserve serious scrutiny. The tax demand is disputed, not automatically payable in full.
Would you consider the IPO at ₹139? What would you need to know about the tax case first?
The detail, from the RHP
What the company is
German Green Steel and Power, incorporated 2008 and run by the Iraki family, is a vertically integrated secondary steel maker in Kutch, Gujarat. The chain runs scrap and iron ore → sponge iron → MS billets → TMT bars, sold under the "German TMT" brand using the Thermex quenching process. Two plants: Samakhiyali (integrated) and Viramgam (through subsidiary German TMX Private Limited). Capacities: sponge iron 66,000 t, billets 214,500 t, TMT 181,500 t a year. Utilisation rose from 72% in FY25 to 88% in FY26. About 75% of its power comes from its own coal, waste-heat, wind and solar units, with a 25.2 MW hybrid plant under construction (16.2 MW commissioned). It holds a 5-star green steel rating, the highest available.
TMT bars were 79% of FY26 revenue, up from 63% in FY24. Revenue per tonne fell from ₹60,611 to ₹52,151 over the same period as steel prices softened, so the growth is volume, not price.
Suppliers: iron ore pellets, scrap and thermal coal, bought on purchase orders with no long-term contracts. Three creditors account for 73% of trade payables. The plant sits about 70 km from Kandla and Mundra ports.
Customers: dealers and distributors (dealer revenue grew roughly tenfold in two years to ₹351 Cr), direct sales to road, power and real-estate projects, and since April 2025 a three-year contract-manufacturing agreement with JSW One Distribution. Top customer 10.67% of FY26 revenue and unnamed at its own request; top 5 = 31.9%; top 10 = 50.6%.
The issue
| ₹ crore | Share | |
|---|---|---|
| Fresh issue | 290.0 | 95.4% |
| Offer for sale | 13.9 | 4.6% |
| Total | 303.9 |
Post-issue market capitalisation at ₹139: about ₹1,047 Cr on 7.53 crore shares.
Fresh proceeds: ₹226.33 Cr (78% of the fresh issue) to the Samakhiyali expansion, a ₹348 Cr project that takes sponge iron to 148,500 t, billets to 412,500 t and TMT to 346,500 t by FY28, including the hybrid power plant; ₹7.70 Cr to prepay part of an HDFC Bank term loan with ₹59.4 Cr outstanding; the balance to general corporate purposes, capped at 25%.
The DRHP filed with NSE in June 2025 sought a fresh issue of up to ₹450 Cr and an OFS of 20 lakh shares. The RHP settled for ₹290 Cr and 10 lakh shares.
Who owns it, who is selling
No private equity. Promoters and promoter group held 96.63% pre-issue; the remaining 3.37% is the pre-IPO placement of 18,38,000 shares at ₹270 on 26 September 2025, raising ₹49.62 Cr. Post-issue the promoters hold 68.54%, nothing pledged. The OFS is 5 lakh shares each from Inamulhaq and Abdulhaq Iraki, whose weighted average cost of acquisition per the DRHP is ₹15.28 and ₹5.00 a share. At 1.8% of their holding, the sale is immaterial.
The numbers
Restated consolidated, ₹ crore:
| FY24 | FY25 | FY26 | |
|---|---|---|---|
| Revenue from operations | 1,130 | 1,508 | 1,679 |
| EBITDA | 79 | 117 | 167 |
| EBITDA margin | 7.0% | 7.75% | 9.9% |
| PAT | 41.7 | 59.9 | 79.9 |
| PAT margin | 3.7% | 4.0% | 4.8% |
| Operating cash flow | 28 | 74 | 141 |
| ROE | 23.7% | 20.4% | 18.9% |
| ROCE | 18.6% | 15.9% | 19.3% |
Three-year operating cash flow of ₹244 Cr against PAT of ₹182 Cr: the profits are cash-backed. ROE is falling as the equity base grows. The FY26 margin gain came from utilisation, not pricing, which is the thing the valuation rests on.
Debt and interest cover
Total borrowings ₹334 Cr against net worth ₹422 Cr: debt/equity 0.79 (from 1.18 in FY25), net debt about 1.9x EBITDA. Finance cost runs near 2% of revenue, so EBITDA covers interest roughly four to five times. The ₹7.7 Cr repayment is 2% of debt. Since the IPO funds ₹226 Cr of a ₹348 Cr project, the balance comes from cash flow or fresh borrowing, so leverage is more likely to rise than fall through FY28.
Listed peers per the RHP, and valuation
As of 9 September 2026: Beekay Steel P/E 22.5x (RoNW 3.5%), Gallantt Ispat 27.8x (14.6%), Kamdhenu 14.6x (19.8%), MSP Steel 61.6x (3.3%), VMS TMT 8.9x (9.2%). German Green's RoNW of 18.9% is second only to Kamdhenu. At ₹139 the issue is 9.5x FY26 earnings on the pre-issue share count, 13.1x on post-issue shares, 1.8x book. Cheaper than every peer except VMS TMT, with better returns than most.
Flags in the RHP
- Direct-tax demand of ₹112.65 Cr under appeal before CIT(Appeals), disclosed as a contingent liability, plus ₹7.96 Cr of GST/VAT disputes.
- 97.7% of revenue from Gujarat; the largest customer unnamed.
- Pre-IPO placement at ₹270 against an IPO price of ₹139; issue size cut from the DRHP.
- The "German TMT" logo is not registered in the company's name; cease-and-desist notices received.
- Anchor book of ₹91 Cr placed entirely with six offshore vehicles (Necta Bloom VCC, Lords Multigrowth, Compact Structure, Arnesta Global PCC, Zeal Global, Venus VCC); no domestic mutual fund or insurer. Half unlocks on 30 October.
- 78% of proceeds into one project; three suppliers at 73% of payables; input materials 83% of costs.
- Related-party dealings small (₹2.8 Cr, 0.17% of revenue); a ₹1.6 Cr electricity dispute in the Gujarat High Court.
Subscription and grey market
At 12:21 on the closing day: QIB 1.42x, HNI 21.7x, retail 13.3x, overall 11.7x. GMP ₹18, about 13%, down from ₹27.50 on 25 September. Retail and HNI are piling in while institutions are barely covered.
Foreign money in this sector
NSDL fortnightly data: Metals & Mining net +₹844 Cr over the six months to mid-September 2026, +0.3% of a ₹2.86 lakh crore FPI holding, essentially flat. The sectors that buy TMT are worse: Construction −₹3,814 Cr and Construction Materials −₹5,419 Cr over the same period.
Where it lands
Cheap, real, and not clean. The business is genuine: volume-led growth, cash-backed, 75% captive power, and 95% of the issue going into doubling capacity rather than into anyone's pocket. The discount to peers is the price of a tax claim worth a quarter of the net worth, a customer book that is one state, a brand whose logo the company does not own, and a private round a year ago at double this price. The listing looks covered; the three-year case rests on the tax ruling and on the FY28 capacity arriving without a second round of debt.
Sources: German Green Steel and Power DRHP (NSE, June 2025) and RHP (offer structure, objects, shareholding, restated financials, peers, risk factors); anchor allocation release of 24 September 2026; NSE/BSE subscription data via IPO trackers as of 29 September 2026; NSDL fortnightly FPI sector flows via Intrynsic.ai.
For educational purposes only. Not investment advice. Intrynsic.ai is not a SEBI-registered investment adviser. Do your own research.