Hariom Pipe Industries Limited IPO Details Issue Price, Date, News, Allotment Status, GMP, Link, Updates

Hariom Pipe Industries Limited IPO Company Profile :

Incorporated in June 2007, Hariom Pipe Industries Limited manufactures Sponge Iron, Mild Steel (MS) Pipes, MS Billets, Scaffolding, and HR Strips. Hariom caters to the southern and western Indian markets for their products. Their MS Pipes are marketed and sold under the brand name – Hariom Pipes. They use iron ore to produce Sponge Iron which is then processed across various stages to manufacture their final products viz. MS Pipes and Scaffolding making the manufacturing process cost effective. Hariom mainly sells MS Pipes through more than 200 distributors and dealers. They also sell MS Pipes and Scaffoldings to certain developers and contractors directly as B2B sales. Company is planning to build scale and expand its portfolio of value-added products.

 

IPO-Note	Hariom Pipe Industries Limited
Rs 144 – Rs 153 per Equity share	Recommendation: Avoid

 

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Hariom Pipe Industries Limited IPO Details-

Issue Details
Objects of the issue	·Funding capital expenditure requirements ·Funding the working capital requirements of Company and ·General corporate purposes
Issue Size	Total issue Size -Rs. 130.05 Cr. Fresh Issue– Rs. 130.05 Cr.
Face value	Rs.10.00 Per Equity Share
Issue Price	Rs. 144– Rs. 153
Bid Lot	98 shares
Listing at	BSE, NSE
Issue Opens:	30th  Mar, 2022 – 5th  Apr, 2022
QIB	30% of Net Issue Offer
Retail	35% of Net Issue Offer
NII	35% of Net Issue Offer

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Hariom Pipe Industries Limited IPO Strengths:

• Strategic location of manufacturing Units
• Cost advantage in manufacturing the products
• Longstanding Integrated nature of the operations
• Environment friendly manufacturing process

 

Hariom Pipe Industries Limited IPO Key Highlights:

• Revenue from Operations grew at a CAGR of 38% from FY19-21.
• Net profit Margin of the company improved from 4.91% in FY20 to 6.4% as on 30^th September, 2022 due to decrease of finance cost and depreciation.
• Raw material as % of sales increased from 62.9% in FY19 to 70.9% in FY21.
• EBITDA margin decreased from 14.81% in FY20 to 12.86% in H1FY22.
• Debt to Equity Ratio reduced from 1.41 in FY20 to 1.05 in H1FY22.
• Current Ratio stands at 1.58 at the end of 30^th  September, 2022

Hariom Pipe Industries Limited IPO Financial Performance:

Hariom Pipe Industries Limited IPO Shareholding Pattern:

Shareholding Pattern	Pre- Issue	Post Issue
Promoters & Promoter Group	99.1%	66.03%
Public	0.9%	33.97%

Source: RHP, EWL Research

Hariom Pipe Industries Limited IPO Risk Factors:

• Company has not entered into long-term agreements with customers for purchasing products
• Derive a substantial portion of revenue from a limited number of customers with top 10 customers contribute 62.37% in total Revenue. Further Largest customer contributes 24.18% to the total revenue.
• Demand and pricing in the steel and steel products industry is volatile and is sensitive to the cyclical nature of the industries it serves.

Hariom Pipe Industries Limited IPO Outlook:

Hariom Pipe Industries has a strong hold on steel products with wide distribution network across India and especially in South and Western India. Company’s primary product is HR (Hot-Rolled) MS pipes. Company in September 2020 acquired the Sponge Iron manufacturing facility i.e. Unit II as a part of backward integration initiatives to achieve the goal of becoming an end-to-end and cost-effective manufacturer. During the period 2021-2026, the demand for steel would be majorly driven by growth in the construction and automotive sectors. The company will deploy funds of IPO for setting up of two additional pipe mills adjacent to existing Unit I. This expansion will increase capacity from the present 84,000 MTPA to 1,32,000 MTPA of MS pipes. It will also expand its Furnace Unit capacity which will enhance their production capacity to the extent of 1,04,232 MTPA from the existing capacity of 95,832 MTPA. At the higher price band of Rs 153, the offer is made at P/E multiple of 25.7x of FY21 Post issue EPS, which looks little pricey considering the small size of the company. Also IPO size is too small with 35% retail quota which gives less chances of getting allotment. Considering the valuation and IPO size of the company we recommend avoid to the IPO

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