Vibhor Steel Tubes IPO: 10 things to know before subscribing to Rs 72-crore issue

The IPO opened for subscription on February 13 and closes February 15.

2) Price Band

The price band for the issue has been fixed at Rs 141-151 a share.

3) Offer details

It is entirely a fresh issue of shares. The anchor book opened for a day on February 12 and the company raised Rs 22 crore from Saint Capital Fund, Chhattisgarh Investments Ltd and Neomile Growth Fund-Series I.

4) Objectives of Issue

The company will use the net proceeds to fund the working capital requirements and for general corporate purposes.

5) Lot size

Investors can bid for a minimum of 99 shares and in multiples of 99 afterwards. A retail investor will have to at least invest Rs 13,959 (lot size x lower price band of Rs 141). At the upper end, the bidding amount will increase to Rs 14,949.

6) Company profile

Vibhor Steel Tubes is a manufacturer and exporter of mild steel/carbon steel ERW black and galvanized pipes, hallow steel pipe and cold rolled steel strips/ coils.

The company has a long-term agreement for six years with Jindal Pipes. Under the agreement, Jindal will provide orders with a minimum quantity of 1,00,000 MT per annum to fill the majority capacity of Unit I & Unit II of the company.

The company has two manufacturing facilities in Raigad, Maharashtra and Mahabubnagar, Telangana and a warehouse in Haryana's Hisar.

7) Financials

The company's revenue in FY23 rose 36 percent to Rs 1,113.12 crore from FY22. Profit after tax jumped 86 percent to Rs 21 crore on recovery from the Covid-19 pandemic.

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In the six months ended September 30, 2023, revenue stood at Rs 530.51 crore, PAT at Rs 8.52 crore and EBITDA at Rs 23.69 crore. In the same period, the PAT margin was at 1.61 percent, the EBITDA margin at 4.47 percent, debt to equity ratio at 1.83 times, RoCE at 6.97 percent and RoE at 8.37 percent.

8) Issue managers

The lead managers to the IPO are Khambatta Securities, while Kfin Technologies is the registrar. The company's promoters are Vijay Kaushik, Vibhor Kaushik, Vijay Laxmi Kaushik and Vijay Kaushik HUF.

9) Risks

(i) The company derives over around 90 percent of its revenue from Jindal Pipes Limited. Cancellation by Jindal Pipes or delay or reduction in their orders could have an adverse effect on its business, results of operations and financial condition.

(ii) The company has reported certain negative cash flows from operating, investing and financing activities

(iii) The business is largely concentrated in Maharashtra and Telangana and is affected by various factors associated with these states.

(iv) As of FY23, the company had the highest debt-to-equity ratio at 1.63 times in the peer group. The net debt stood at Rs 126.82 crore.

10) Listing Date

The basis of allotment will be finalised by February 16, shares will be credited to the demat accounts of successful bidders by February 19 and the stock will likely list on the NSE and BSE on February 20, the red herring prospectus says.