Hariom Pipe Industries will be the third and final initial public offering to open in March. The other two IPOs that have already opened are Veranda Learning Solutions and Uma Exports.
Here are 10 key things about the Hariom Pipe public issue:
1) IPO dates
Bidding for the shares on offer will start on March 30 and end on April 5. The anchor book, if any, will open for a day on March 29.
2) Price band
The shares will be offered in the range of Rs 144 to Rs 153 each, which are 14.4 and 15.3 times, respectively, the face value (Rs 10) of the shares.
3) Public issue
The company plans to raise Rs 122.4 crore at the lower end of the price band and Rs 130.05 crore at the upper end. The IPO is an offer of 8.5 million shares.
Click here for all IPO-related news
4) Reserved portions and lot size
The company has reserved 30 percent of the offer for qualified institutional buyers and 35 percent each for retail and non-institutional investors.
Investors can bid for a minimum of 98 shares and in multiples of 98 shares thereafter. The minimum investment by a retail investor is Rs 14,994 for a single lot of 98 shares and the maximum investment is Rs 1,94,922 for 13 lots (1,274 shares).
5) Objectives of the issue
The net proceeds from the offer will be used for capital expenditure (Rs 50.05 crore), and working capital requirements (Rs 40 crore), besides general corporate purposes.
6) Company profile and expansion
Hyderabad-based Hariom makes mild steel (MS) pipes, scaffolding, hot-rolled strips, MS billets, and sponge iron, catering to the southern and western Indian markets. Its MS pipes are sold in these areas under the brand Hariom Pipes through more than 200 distributors and dealers.
Its plant in Mahabubnagar district in Telangana manufactures finished steel products from iron scrap and sponge iron. Another plant in the Anantapur district in Andhra Pradesh, acquired in September 2020, exclusively makes sponge iron.
The MS pipe and tubes market in India is expected to reach $1.69 billion by 2026, and the galvanised pipes market size can go up to $110.75 million. The market for HR strips and coils could increase to $5.42 billion and MS billets market size to $980 million by 2026, according to the company.
With the net proceeds of the issue, the company will expand its MS pipe manufacturing capacity by setting up two additional mills adjacent to the existing Unit I. This expansion will increase the capacity to 1,32,000 MTPA from the present 84,000 MTPA.
It will also expand the furnace unit capacity, which will enhance production capacity to 1,04,232 MTPA from the existing capacity of 95,832 MTPA.
The company will continue to explore backward and forward integration initiatives to achieve the goal of becoming an end-to-end and cost-effective manufacturer.
Promoters Rupesh Kumar Gupta (managing director) and Sailesh Gupta (whole-time director) are third-generation entrepreneurs and individually have more than a decade of experience in the iron and steel industry. The promoters have a 99.1 percent shareholding in the company.
Hariom’ profit rose 91.5 percent to Rs 15.13 crore in FY21 and revenue climbed 58 percent to Rs 254.13 crore. The company clocked a profit of Rs 12.87 crore on revenue of Rs 200.87 crore in the six months ended September 2021.
Its long-term borrowings stood at Rs 28.44 crore and short-term borrowings at Rs 59.87 crore as of September 2021, against Rs 33.9 crore and Rs 46.23 crore, respectively, at the end of March 2021.
a) Any substantial increase in prices of raw materials and any decrease in supply will materially adversely affect the company’s business.
b) The steel and steel products industry is characterised by volatility in prices of raw materials and energy, which could adversely affect profitability.
c) The company had negative cash flows in recent fiscals. Sustained negative cashflow could adversely impact business, financial conditions, and results of operations.
d) Disruption of third-party mining operations could adversely impact its ability to obtain raw materials at reasonable prices.
e) The company derived a significant portion of its income from top 10 customers.
10) Allotment and listing dates
The company will finalise share allotment by April 8 and credit shares to the eligible investors by April 12. Unsuccessful investors will get their refunds by April 11.
Trading in the company’s shares on the BSE and the National Stock Exchange will start on April 13.ITI Capital is the book running lead manager to the issue and Bigshare Services is the registrar to the offer.