In this post, rather than rehashing standard IPO details, we’ll dive into the details I consider critical from an investor’s perspective: the **IPO structure**, **secondary share sales**, **use of proceeds**, **indebtedness**, **operational strength**, and **growth potential**. The fact that the company has prepared a comprehensive investor presentation—something we rarely see in many IPOs—creates a positive first impression. As we analyze the company based on its valuation of **TRY 29 billion** and an **IPO discount of 20%**, we’ll look to make sense of the overall picture presented by both the figures and the operational setup.
IPO Structure and Secondary Share Sales
Planning a free float of **15.42%**, with a substantial **86%** of this offer coming directly through a capital increase, presents a very encouraging picture. I view this as a key indicator that controlling shareholders are focused on the company’s future and long-term growth.
The post-IPO ownership structure breaks down as follows:
* Tevfik Önder KARALP: 43.16%
* Özge YASTI: 20.71%
* Özlem BAKIREL: 20.71%
* Free Float: 15.42%
The family-owned nature of the business suggests that current management direction will continue after the IPO without any radical shifts.
Use of Proceeds and Cash Requirements
The IPO is expected to raise approximately **TRY 3.727 billion** in proceeds. Looking at the planned use of funds in the prospectus, we see the following allocation:
* 90%: Raw material procurement and working capital financing
* 6%: Production facility investments
* 4%: Renewable energy investments
It is striking that a dominant **90%** of the proceeds is allocated to working capital and raw materials. Although raw material procurement is listed as a separate line item in the prospectus, it is clear that this demand is fundamentally met through working capital. Tightness in procuring raw materials stems directly from past pressure on cash flow management. Consequently, almost all of the fresh cash will directly land on the balance sheet under inventory.
Operational Setup and Growth Potential
The company continues its manufacturing and sales activities in the basic metals industry. Alongside this, it conducts small-scale electricity sales to meet internal energy needs, contributing under 1% to net sales. Given that raw materials, labor, and energy represent the largest cost items across the industry, energy investments should be viewed as an effort to alleviate cost pressures.
Product-based sales volume and revenue distribution are as follows:
* Section Steel Sales: ~50% of revenue
* Rebar: 23.63%
* Steel Billets: 16.91%
* Wire Rod: 6.51%
* Energy Sales: Under 1%
Operating production facilities in two distinct locations—Denizli and İzmir—holds strategic importance for freight costs and export potential. Furthermore, headcount expanding from 1,258 in 2023 to 1,360 today clearly reflects operational momentum.
Indebtedness, Receivables, and Cash Conversion Cycle
Turning to the balance sheet, cash and cash equivalents show a downward trend over the years. The current cash position stands at **TRY 46 million**. While trade receivables stand at **TRY 1.2 billion**, trade payables are at **TRY 2.678 billion**. Although the net trade payables balance appears negative at **-TRY 1.478 billion**, turnover rates cushion this picture to some degree. Days sales outstanding (DSO) is remarkably fast at 15 days, whereas days payables outstanding (DPO) is around 50 days. The 35-day gap makes managing the negative balance more tolerable.
On the other hand, there are major question marks on the inventory side. Currently sitting at **TRY 7.7 billion**, inventory days (DSI) have been creeping higher over time:
* 2023: 70 days
* 2024: 90 days
* 2025: 110 days
* Current Quarter: 110 days
As time to convert inventory into sales lengthens, justifying such a massive inventory requirement becomes difficult. Looking at industry peers like EREGL or KRDMA, inventory levels are indeed high across the board; however, peers’ stronger cash positions create a key distinction.
On the liabilities side, **TRY 5.8 billion** of short-term debt consists of bank loans, alongside **TRY 2.7 billion** in trade payables due within 50 days—pointing to a severe cash bottleneck. Total debt stands at approximately **TRY 11 billion**. The maturity breakdown of total debt is as follows:
* Within 0–1 year: TRY 6,998,462,873
* Within 1–2 years: TRY 4,242,556,487
* Within 2–3 years: TRY 1,235,624,507
* Within 3–4 years: TRY 919,637,344
* Within 4–5 years: TRY 351,058,856
* Over 5 years: TRY 40,998,709
With virtually all debt coming due within the next two years, the debt structure carries substantial risk. Unless inventory turnover speeds up or fresh credit lines are secured, I believe caution is warranted regarding cash flow sustainability.
In a high-interest economic environment where inflation hovers around 30% and real interest rates persist, I prioritize cash flow generation over the book value of non-current assets. Heavy financing expenses eroding operating profit stand out as the main pressure point on the balance sheet.
Capacity, Investments, and Outlook
Capacity utilization rates are a critical parameter in industrial manufacturing. Investments made by the company in recent years are clearly reflected in capacity growth:
* Steel Billets (Annual Capacity: 1,200,000 Tons):
* 2023: 57%
* 2024: 74%
* 2025: 73%
* Section Steel (Annual Capacity: 700,000 Tons):
* 2023: 64%
* 2024: 66%
* 2025: 64%
* Wire Rod and Rebar (Annual Capacity: 600,000 Tons - Facility commissioned in May 2023):
* 2023: 45%
* 2024: 65%
* 2025: 78%
Examining the income statement and sales performance reveals an encouraging recovery trend in exports:
* 2023: Foreign Sales: TRY 5,824,695,669 / Total Net Sales: TRY 12,739,656,964 *(Export Share: 46%)
* 2024: Foreign Sales: TRY 8,241,252,651 / Total Net Sales: TRY 20,249,965,885 *(Export Share: 41%)
* 2025: Foreign Sales: TRY 8,696,638,980 / Total Net Sales: TRY 22,971,910,492 *(Export Share: 38%)
* 2026 (First 3 Months): Foreign Sales: TRY 3,815,552,880 / Total Net Sales: TRY 6,617,483,449 *(Export Share: 58%)
The **58%** export share achieved in the latest quarter serves as the primary driver supporting the bottoming-out signal seen across the broader sector.
Regarding margins, while gross profit margin remains flat at around 13%, operating profit margin exhibits volatility at 9%. The steady drop in net profit margin from 14% in 2022 to **0.53%** clearly demonstrates the weight of financing costs. Indeed, out of **TRY 2.5 billion** in operating profit generated in 2025, **TRY 1.4 billion** went to financing expenses. In the current quarter, despite generating TRY 538 million in operating profit, recording TRY 583 million in financing expenses completely wiped out operational gains.
Overall Evaluation
The company’s business model, strong export potential, and scale—which allows for greater flexibility compared to listed peers—present a promising opportunity. Additionally, the IPO being structured predominantly via capital increase alongside a low free float stand out as positive elements.
In contrast, the financial burden of an **TRY 11 billion** debt load and the need to repay nearly all of it within the next two years constitute a major risk factor. The fact that IPO proceeds will primarily fund inventory and working capital rather than debt reduction suggests liquidity tightness may persist in the near term.
In my personal view, rather than chasing short-term expectations, the company offers a story worth tracking over the long run—provided it unwinds its debt structure over time, eases financing expenses, and stabilizes top-line performance.
Key Areas for Further Scrutiny
* Detailed monthly maturity schedule of short-term liabilities
* Operational drivers behind the rise in inventory days (longer time to convert inventory to sales)
* Financial impact of subsidiaries on the consolidated balance sheet
LEGAL DISCLAIMER: This content does not constitute investment advisory services. Investment advisory is a personalized service provided based on an individual’s risk-return profile, financial standing, and investment objectives. The information, commentary, and assessments provided herein are prepared solely for general informational purposes and should not be construed as investment recommendations or guidance. This content may not align with the reader’s financial position or risk-return preferences; therefore, investing based solely on this information may not yield the expected outcomes.
