Are there new Vulcan shares about to hit the ASX?

Will this be an IPO to get involved with?

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Construction workers carry big steel beam

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One of the biggest success stories on the Australian share market this year has been the Vulcan Energy Resources Ltd (ASX: VUL) share price.

Since the start of the year, the clean lithium company’s shares have rocketed 430% higher.

No doubt the investors in another Vulcan will be hoping for similar success if and when its shares land on the Australian share market.

What’s happening?

According to the Australian, Australia and New Zealand metals distributor Vulcan will soon be launching a cornerstone process aiming to raise $500 million via an initial public offering (IPO). And if all goes to plan, the company will hit the ASX boards before the end of the year.

The report notes that Vulcan is hoping to list on the share market with a valuation of at least $1 billion. And with the company forecasting an annual net profit of $70 million, this would give it an earnings multiple of approximately 14x upon listing.

The company notes that this will put it in a similar ballpark to plumbing and bathroom materials supplier Reece Ltd (ASX: REH), bathroom and kitchen supplier GWA Group Ltd (ASX: GWA), and diversified products company GUD Holdings Limited (ASX: GUD).

It appears as though Vulcan doesn’t want to be put into the same bracket as an arguably more comparable company, BlueScope Steel Limited (ASX: BSL). The steel products company’s shares are currently trading at just 5x estimated FY 2022 earnings.

What are people saying about Vulcan?

The Australia understands that fund managers are positive about Vulcan, noting that it is a solid, well-run business. Vulcan is also benefiting greatly from high steel prices and its strong market position.

Though, there also appear to be a few concerns about the cyclical nature of the business. Particularly given how the Auckland-based company generates the majority of its revenue from distributing steel products to the construction industry.

Time will tell if this is another successful IPO.

Should you invest $1,000 in Vulcan Energy right now?

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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