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Hariom Pipe Industries IPO- All the details for you

  • Marisha Bhatt
  • Apr 04 2022
  • 7 minutes
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Introduction

The start of the year 2022 has brought in a lot of buzz in the Indian stock markets. Apart from many NFOs, there have also been a couple of IPOs launched in the markets that make up for excellent investment opportunities for the investors. One of the final IPOs in the market for the month of March as well as for this financial year is from Hariom Pipe Industries. 

Given below are a few details of the company as well as the IPO to help the investors make sound investment decisions. 

Current details of Hariom Pipe Industries

Let us discuss a few details of the company before going into detail about its IPO.

  1. Business of the company

Hariom Pipe Industries is an integrated manufacturer of steel products that are based out of Hyderabad and has the majority of clients belonging to southern and western India. Some of the products manufactured by the company and catered under the brand name ‘Hariom Pipes’ include MS (mild steel) pipes, scaffolding HR strips, MS billets, and sponge iron. 

The company uses a majority of the sponge iron, HR strips, and MS billets in its in-house production of MS pipes and Scaffolding. Hariom Pipe Industries are manufacturers of more than 150 customized MS pipes and scaffoldings. These customer-specific products are used in various sectors like housing, solar, automotive, fabrication, agriculture, engineering, infrastructure, etc. The company caters to its clients through a network of approximately 200 dealers as well as through its B2B sales segment. 

The company has two manufacturing units in the southern part of the country.

  • Unit 1 located in Telangana is used in the manufacture of finished steel products and 
  • Unit 2 in Andhra Pradesh is used in the manufacture of sponge iron. 

The Hariom Pipes are self-sufficient in the manufacture of its final products MS pipes and Scaffoldings as the raw material for the same is procured from its Unit 1 (sponge iron) and other necessary products like HR strips and MS billets are also produced in house. 

  1. Promoters

The promoters of the company are Sailesh Gupta and Rupesh Kumar Gupta. Together they have more than a decade of valuable experience in the steel manufacturing business. Their combined stake in the company accounts for 99.1% of the total shareholding of the company.  

  1. Financials

The past couple of years has been quite fruitful for the company as it has seen drastic growth in terms of its sales and profit margin. 

  • The sales of the company have seen a growth of 58% in FY 20-21and reached approximately Rs. 254.13.crores. 
  • The profit of the company has jumped exponentially by a whopping 91.5% and has reached Rs. 15.13 crores.
  • The profits of the company for the first 6 months of FY 21-22 i.e., up to September 2021 stood at Rs. 12.87 crores and the sales during this period were Rs. 200. 87 crores. 

Details of the IPO

As mentioned above, the IPO of Hariom Pipe Industries is the last IPO of the financial year. The key details of this IPO are given below.

  1. The objective of the IPO

The company has launched the IPO to meet its CAPEX and working capital requirements. The company aims to use Rs. 50.05 crores towards the capital expenditure of setting up two additional units adjacent to Unit 1. This expansion will result in an increased production capacity from the existing 84,000 MTPA to the proposed 1,32,000 MTPA. The company is also looking to expand its furnace unit capacity from 95,832 MTPA to 1,04,232 MTPA. Apart from investment in capital expenditure, the company will also invest Rs. 40 crores towards working capital requirements. The balance of the IPO proceeds will be used for general corporate purposes. 

  1. Key dates of the IPO

The IPO of the company opens on 30th March 2022 and closes on 5th April 2022. 

The shares subscribed under the IPO will be allotted by 8th April 2022 and credit for the shares will be given to the eligible investors by 12th April 2022. 

The refund of the amount subscribed by unsuccessful investors will be credited by 11th April 2022. Following this, the normal trading of the shares of the company will begin on 13th April 2022. The shares will be listed on BSE and NSE.

  1. Who can apply?

Hariom Pipes Industries has launched the IPO in the form of a fresh issue. Out of the total issue the company has reserved 30% for QIB (Qualified Institutional Buyers) and 35% of the issue is reserved for retail and non-institutional investors. Here’s how the IPO allotment process works.

  1. Price band

The fresh issue of the company will be priced at a face value of Rs. 10 per share. The price band of the issue is fixed at Rs. 144 to Rs. 153 per share.

  1. IPO size

The company plans to raise Rs. 122.4 crore from the lower price range of the price band and Rs. 130.05 crore from the upper end of the price range.  

  1. Lot size

The company plans to issue 85 lakh equity shares under the IPO. Investors can subscribe to the IPO in lots. Each lot size is made of 98 shares and the investors can invest a minimum of Rs. 14,994 for a single lot and a maximum of Rs. 1,94,922 for 13 lots. 

  1. Other details

The IPO has ITI Capital as its sole book-running lead manager. Apart from this, Bigshare Services Private Limited is the registrar of the issue. 

Conclusion

Hariom Pipes Industries IPO is priced at approximately 16 to 17 times the pre-issue level of FY 21 EPS. The company is strategically located and has the advantage of integrated nature of operations. The products of the company are also competitively priced as compared to its competition. The company has a sound business model and a good growth trajectory making the IPO a good investment opportunity for the investors.    

However, don’t miss out the fact that investing in equity markets is subject to volatility and risks. Head out to the Finity App to apply for the IPO or open a Demat account if you dont have one. 

FAQs

1. Who are the top competitors of Hariom Pipe Industries?

The top competitors of Hariom Pipes Industries includes Tata Steel and JSW Steel.

2. What are the key risks of Hariom Pipe Industries?

Some of the key risk factors of the company include the following 
1) The concentration of approximately 60.7% of the revenue from top 10 customers and approximately 24.5% from a single customer in FY 21.
2) A highly competitive and volatile market where the prices of the final product are highly dependent on the raw material prices and its procurement.
3) The geographic concentration of its manufacturing units in the same region where any major disruption can lead to a breakdown of the manufacturing process.
4) Dependence on in-house manufacturing unit to supply raw material for its other manufacturing unit. A delay or breakdown of the supply chain can lead to disruption of the manufacturing of the final products. 

3. Should investors subscribe to the IPO?

The IPO is considered to be an excellent investment opportunity for aggressive investors or investors with a high-risk appetite based on its pricing as well as the company fundamentals.

4. What is the purpose of this IPO?

The purpose of the IPO is to fund its capital expenditure as well as working capital requirements other than meeting the general corporate purposes.

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