From finances to subscription status, here’s everything you need to know about Hariom Pipe Industries IPO
2021 witnessed 63 Indian companies (highest in a decade) tap into the initial public offer (IPO) market.
The IPO fever doesn’t seem to stop.
The IPO of Hariom Pipe Industries (Hariom) opened for subscription on 30 March 2022.
The manufacturer of steel products is looking to raise about ₹ 1.3 bn by offering 8.5 m fresh equity shares.
Here are some details about this IPO…
Issue Period: 30 March 2022 to 5 April 2022
Price Band: ₹ 144 to ₹ 153 per equity share
Bid Lot: 98 shares and in multiples thereof
Face value: ₹ 10 per equity share
Object of the issue: To fund its capital expenditure, working capital requirements, and towards expenses for general corporate purposes.
The stock will get listed on exchanges (Bombay Stock Exchange and National Stock Exchange) by 13 April 2022.
Headquartered in Hyderabad, Hariom is a small-sized but backward integrated manufacturer of Mild Steel (MS) Pipes, Scaffoldings, Hot Rolled (HR) Strips, MS Billets, and sponge iron.
The company caters to diverse end-use industries like infrastructure, automotive, housing, agriculture, solar, fabrication, and engineering.
Currently, the manufacturing process is split between 2 plants: unit I in Mahabubnagar District, Telangana, and unit II in Anantapur District, Andhra Pradesh.
Unit II is dedicated to manufacturing sponge iron and is strategically located near Bellary, a hub for iron ore production in South India. Iron ore is mainly procured through the online bidding process.
Unit I converts sponge iron and iron scrap into finished steel products. The company’s USP lies in its wide range of product specifications and customisation.
The company has a strong network of dealers and distributors (around 200) in the southern and western regions of India. Sales to certain developers and contractors are also done directly via business-to-business (b2b).
For the financial year ended March 2021, the company’s revenues were up nearly 60%.
The net profit margin came in around 6% and the bottomline almost doubled from ₹ 79.1 m (financial year 2020) to ₹ 151.3 m.
For more details, check out Hariom’s RHP.
APL Apollo Tubes, Hi-Tech Pipes, Rama Steel Tubes, and JTL Infra, among others, are the company’s listed industry competitors.
#4 Arguments in favour of the business
The company’s synchronised manufacturing process leads to cost and time efficiencies.
The company benefits from an uninterrupted power supply at a competitive rate from IEX through the online bidding process, especially during peak seasons of agriculture.
The use of a crusher reduces wastage as the extracted iron content from the slag is recycled in furnaces to produce MS Billets.
Installation of the hot charging process for manufacturing as well as the rail trolly system for internal shifting of raw materials has significantly reduced the carbon footprint of the company.
The chimneys are equipped with pollution control equipment that stores the collected dust particles in filter bags which are further sold to industries like cement for their operational purposes.
Both units are furnished with rainwater harvesting pits.
The senior management is well versed in the industry, some with more than a decade of experience in marketing and distribution.
The demand for steel products is volatile as it serves cyclical industries like housing and automobile.
Raw materials and stores consumed accounted for 77.2% of total expenses for the fiscal year 2021. Volatility in prices of energy and raw materials like iron ore, iron ore fines, scrap, and power directly affect profitability.
Income source concentration: 60.7% and 49.8% of revenue from operations were represented by top 10 customers during the fiscal years 2021 and 2020, respectively.
Outstanding legal proceedings involving the company, promoters, and certain directors
Absence of exclusive distribution arrangements: Deficiency in services provided by any channel partner leading to payment delays or defaults.
Exposure to geographical and political unrest due to the locations of manufacturing plants.
The industry attracts higher scrutiny of environmental and safety laws.
IPO Subscription Status as of 5 April 2022
There was no anchor placement in the IPO.
So far, the 30% qualified institutional buyers (QIB) portion has been subscribed 1.44x. The 35% non-institutional buyers (NII) portion was oversubscribed 4.61x.
The remaining 35% portion for retail investors was subscribed over 10.9 times. Retail investors are clearly backing this issue. They’re applying for this issue after a long hiatus in the primary market.
Overall, the issue was subscribed 5.85 times at the time of writing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
Note: Equitymaster.com is currently not accessible due to technical reasons. We regret the inconvenience caused. Meanwhile, please access our content on LiveMint.com. You can also track us on YouTube and Telegram.
(This article is syndicated from Equitymaster.com)
Log in to our website to save your bookmarks. It'll just take a moment.
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
Your session has expired, please login again.
You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.
This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp