Vibhor Steel Tubes stock makes bumper market debut; should you book profit, buy more or hold?

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

Vibhor Steel Tubes stock listed at an 181 percent premium over the IPO price, the best listing so far in 2024 in the mainboard space. The debut surpassed analysts' expectations of an 86-92 percent premium on February 20. The stock opened at Rs 425 on the NSE and Rs 421 on the BSE against the issue price of Rs 151.

“Post listing, Vibhor would be matched with its listed peers on the valuation front, giving the company limited upside. Hence, we recommend allotted investors to book partial profits around Rs 425-450 levels,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

All you need to know about Vibhor Steel Tubes IPO

The issue had received a strong response from investors, getting subscribed 320 times. High net-worth individuals (HNIs) remained at the forefront, buying 770 times the allotted quota. Retail investors picked up 200 times the portion set aside for them, while the part reserved for qualified institutional buyers was booked 191 times.

“Despite the strong listing, the high valuation could pose potential risks in the long term. Thus, this listing is the right time for investors to exit their holdings; however, those who still want to hold are suggested to keep a stop loss at around Rs 380,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

The price band for the Rs 72.17-crore issue, which opened for subscription on February 13 and closed on February 15, was fixed at Rs 141-151 a share. It was entirely a fresh issue of shares. The company will use the net proceeds to fund the working capital requirements and for general corporate purposes.

The anchor book opened for a day on February 12 in which the company raised Rs 22 crore from Saint Capital Fund, Chhattisgarh Investments Ltd, and Neomile Growth Fund-Series I.

“We advise investors to book profits on the listing day and subsequently consider investing in the company after evaluating its quarterly performance in the near term,” said Dhruv Mudaraddi, Research Analyst, StoxBox.

Vibhor Steel Tubes is a manufacturer and exporter of mild steel/carbon steel ERW black and galvanised pipes, hallow steel pipes 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 tonnes per annum to fill the majority capacity of Unit I and Unit II of the company. The company has two manufacturing facilities in Raigad, Maharashtra, and Mahabubnagar, Telangana, and a warehouse in Haryana's Hisar.

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