The Initial Public Offering (IPO) of Hariom Pipe Industries Limited ("Company"), an integrated manufacturer of Mild Steel (MS) Pipes, Scaffolding, HR Strips, MS Billets, and Sponge Iron, received bids of 1,59,48,226 shares against the offered 85,00,000 equity shares, at a price band of ₹144-153, according to the data available on the BSE website. Overall the issue was subscribed 1.88 times on the third of the Five bidding days. The issue kicked off for subscription on Wednesday, March 30 and will be open till Tuesday, April 5.
The Retail portion was the most subscribed with 4.66 times followed by qualified institutional buyers with 0.44 times. The reserved portion of non-institutional investors witnessed a subscription of 0.33 times. Brokerage Houses like Anand Rathi, Arihant Capital Market, Choice Broking, Hem Securities, Marwadi Shares and Finance, Ventura Securities etc. have recommended "Subscribe" rating to the issue.
According to the Brokerage houses, the issue is valued at a EV/EBITDA of 10.2x based on FY21 EBITDA. From FY19 to FY21, the company had excellent sales growth while maintaining a stable margin profile. Plants strategically positioned with integration, competitive product pricing, cost effectiveness, capacity expansion, experienced management, and a growing network will drive future success. HPIL is fairly valued when compared to its listed competitors.
Headquartered in Hyderabad, Telangana, Hariom Pipe Industries Limited manufactures steel products and has a wide distribution network in South India. The Company caters directly and indirectly to customer requirements in various sectors such as Housing, Infrastructure, Agriculture, Automotive, Solar Power, power, cement, mining and Engineering.
The proceeds from the fresh issue to the tune of Rs. 50.05 crore will be used for funding capital expenditure requirements; Rs. 40 crore will be used for funding working capital requirements and remaining for general corporate purpose.
ITI Capital Limited is the sole Book Running Lead Manager ("BRLM") to the Offer.
Hariom Pipe Industries also caters to diverse end-use industries, which results in strong sales as infrastructure & agriculture sector are witnessing strong growth. The company caters to end-use industries that includes housing, infrastructure, agriculture, automotive solar, fabrication and engineering.
HPIL also focuses on backward integration of its production line by producing sponge from steel and forward integrating it into finished products. It's main focus is to use sustainable steel producing methods, reduce wastage through automation and improve power consumption metrics, increase focus on domestic consumption, use renewables more frequently and reduce freshwater usage and focus on recyclability.
The expansion of furnace will ensure availability of primary raw materials i.e. MS Billets which is used in the production of HR Strips. HR Strips are used as main raw material in its Pipe Mills. The new electric melting furnace will also help in ensuring availability of HR strips for its additional pipe mills. Thus leading to backward integration of its product line. The EBIDTA margin of the Company for Fiscal 2021 is 13.72%. The total income and profit after tax for six months period ended September 30, 2021 stood at Rs. 201.16 crores and Rs. 12.87 Crores respectively.
The company's credit rating for long term has been upgraded from 'CRISIL BBB / Stable' to 'CRISIL Triple BBB+ Outlook: Stable' (pronounced Triple B plus Stable outlook) by CRISIL in the fiscal 2022.