KNOW THE COMPANY:
Hariom Pipe Industries Limited is a company that is engaged in the manufacturing of iron and steel products. The company has an extensive product portfolio and majorly manufacturers, including Mild Steel (MS) Pipes, MS Billets, Scaffolding, Sponge Iron, and HR Strips. Hariom Pipe Industries Limited’s market presence is dominant in the western and southern significant parts of the country. The company manufactures its product under the brand name “Hariom Pipes.” Currently, the company has a client and dealer base of around 200 dealers and distributors. The company’s headquarters are located in Hyderabad, Telangana.
Hariom Pipe Industries Limited has Two manufacturing plants in Telangana. Through these manufacturing plants, its manufacturers finish steel products in the form of iron scrap and sponge iron. The second manufacturing unit is more focused on the production of Sponge Iron only. The company currently holds 150 manufacturing specifications with a total manufacturing capacity of 300832 MT. The company their products to fulfill customer requirements in various sectors. Through its product portfolio, the company has a presence in the sectors such as automotive, housing, power, solar power, cement, infrastructure, agriculture, mining, and engineering. As per the company’s growth plan, the company has currently carried out a phased expansion plan to extend and scale up their gain scale of value-added products. The company’s current capacity is 84,000 MTPA, and the company aims to increase it to a further 1,32,000 MTPA as a result of this development. Hariom Pipe Industries Limited has also drafted a plan to increase the capacity of their furnace to 1,04,232 MTPA from 95,832 MTPA as of now.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the company’s loans, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE OFFER
- Hariom Pipe Industries Limited has an integrated nature of businesses.
- The company’s production and manufacturing method is highly environmentally friendly and on a sustainable development theme.
- Hariom Pipe Industries Limited has greatly benefitted from the strategic location of its manufacturing and warehouse units.
- The company’s product is under a very competitive product pricing category.
- Hariom Pipe Industries Limited has a team of experienced and new-age innovative management, operations, and technical experts and a strong Promoters parentage.
HARIOM PIPE INDUSTRIES IPO DETAILS:
Hariom Pipe Industries Limited recently got approval from SEBI to float their IPO in the market. The IPO of the company is a book-building type IPO of Rs. 130 Crores. The company also stated that it would utilize around Rs from the funds raised by the company. 50.05 crore for the requirement of working capital and another Rs. 40.00 crores for general corporate purposes. The company also stated that the company would hold the remaining funds as cash holdings to be a cash-rich company. The IPO offer issue constitutes around 33.36% of the total post-issue paid-up capital of the company. As per the valuations of the company post-IPO, the company will have a current fully paid-up equity capital that sums up to Rs. 25.48 crores and a market capitalization of Rs. 389.79 crores.
| IPO Opening Date | March 30, 2022 |
| IPO Closing Date | April 5, 2022 |
| Issue Type | Book Building type Issue IPO |
| Face Value | Rs. 10 per equity share |
| IPO Price | Rs. 144 to Rs. 153 per equity share |
| Market Lot | One lot of 98 equity shares of the company |
| Minimum Order Quantity | 98 equity shares |
| Minimum Order Price | Rs. 14,994 |
| Maximum Order Quantity | 1274 equity shares as in 13 lots |
| Maximum Order Price | Rs. 194,922 |
| Listing At | BSE, NSE |
| Issue Size | 8,500,000 equity shares of the company, which aggregates up to Rs. 130.05 Crores IPO Offer |
| Fresh Issue | 8,500,000 equity shares of the company, which aggregates up to Rs. 130.05 Crores IPO Offer |
| QIB Shares Offered | Not more than 30% |
| Retail Shares Offered | Not less than 35% |
| NII (HNI) Shares Offered | Not less than 35% |
| Basis of Allotment Date | April 8, 2022 |
| Initiation of Refunds | April 11, 2022 |
| Credit of Shares to Demat Account | April 12, 2022 |
| IPO Listing Date | April 13, 2022 |
STRENGTHS AND GROWTH ASPECTS:
- Hariom Pipe Industries Limited greatly benefits from integrating their manufacturing Unit I and II. It has led to the optimization of the company’s operations and profitability through backward integration. It has helped the company provide better and more efficient control over their logistics, energy savings and quality control, inventory management, and procurement.
- The company recently recorded bumper profits in the recent quarters due to the increase in demand and the boom in the construction and development sector.
- Hariom Pipe Industries Limited will also benefit from the GoI’s initiative of the Atmanirbhar Bharat and the PLI Scheme to promote the country’s company.
- The company has a highly experienced and qualified team that helps the company carry out its operations, sales, and marketing efficiently.
- The company also benefitted from its competitive pricing factor and the strategic location of the manufacturing units.
- Through their integrated operation, the company has attained a better complimentary product mix.
- The demand for the steel and specialized products manufactured by the company will be a growth-based driven factor for the company.
WEAKNESS AND THREATS:
- The company in its DRHP mentioned that it has some outstanding legal proceedings against the promoters, company, and top management.
- Hariom Pipe Industries Limited has a high dependence on small customers than on large, solid, and well-established clients.
- A significant amount of revenue has been derived from the top ten clients of the company, which reflects a high dependency of the company on these clients.
- The company is very vulnerable to the increase in the prices of the raw materials required in the production of their final product. The increase in the raw material price ab\can hampers their sustainability along with the financial parameters, further degradation of operational performance.
- Hariom Pipe Industries Limited is also vulnerable to the change in the distribution network’s demand, supply, and efficiency due to the cyclical nature of the sector in which the company’s products have been engaged to be used.
- Any delay associated with the payment or default in payments can lead to a significant deficiency and the contraction of the margins on the top-line and bottom line.
- Hariom Pipe Industries Limited will also suffer if it cannot execute its operational and expansion plan due to ineffective management.
- The company still holds some contingent liabilities.
FINANCIAL TRENDS:
| Particulars | For the year ending with the amount in crores | ||||
| 31 March 21 | 31 March 20 | 31 March 19 | |||
| Total Assets | 173.74 | 139.68 | 103.35 | ||
| Total Revenue | 254.82 | 161.15 | 133.92 | ||
| Profit After Tax | 15.13 | 7.91 | 8.02 |
| Particulars of the company in Lakhs | September 2021 | March 2021 | March 2020 | March 2019 |
| Sales | 20,087 | 25,414 | 16,078 | 13,360 |
| Cost of Materials Consumed | 15,054 | 18,032 | 10,953 | 8,409 |
| Changes in Inventories | -1,523 | -746 | -1,887 | 6 |
| Employee Benefits Expense | 989 | 951 | 830 | 581 |
| Power & Fuel | 2,725 | 3,381 | 3,655 | 2,519 |
| Other Expenses | 285 | 368 | 179 | 142 |
| Operating Profit | 2,557 | 3,428 | 2,348 | 1,703 |
| OPM % | 12.73% | 13.49% | 14.60% | 12.75% |
| Other Income | 29 | 68 | 37 | 32 |
| Interest | 417.11 | 751.21 | 737.07 | 354.63 |
| Depreciation | 398 | 626 | 516 | 215 |
| Profit before tax | 1,771 | 2,120 | 1,132 | 1,165 |
| Total Tax Exps | 484 | 607 | 342 | 363 |
| Net Profit | 1,287 | 1,513 | 791 | 802 |
| NPM % | 6.41% | 5.95% | 4.92% | 6.00% |
| No. of shares | 254.76 | 254.76 | 254.76 | 254.76 |
| EPS in Rs | 15.12 | 10.64 | 5.98 | 7.34 |
| PARAMETER | MARCH 21 | MARCH 30 | YoY % |
| Earnings Per Share (Rs) | 8.92 | 5.98 | 49.29 |
| CEPS (Rs) | 12.61 | 9.88 | 27.67 |
| DPS (Rs) | 0.00 | 0.00 | 0.00 |
| Book NAV/Share (Rs) | 41.74 | 36.50 | 14.35 |
| Tax Rate (%) | 28.61 | 30.17 | -5.15 |
| Core EBITDA Margin (%) | 11.33 | 12.38 | -8.47 |
| EBIT Margin (%) | 9.49 | 9.85 | -3.71 |
| Pre – Tax Margin (%) | 7.01 | 5.97 | 17.37 |
| PAT Margin (%) | 5.00 | 4.17 | 19.98 |
| Cash Profit Margin (%) | 7.07 | 6.89 | 2.60 |
| ROA (%) | 9.66 | 6.51 | 48.37 |
| ROE (%) | 25.41 | 18.74 | 35.59 |
| ROCE (%) | 21.47 | 17.94 | 19.65 |
| Asset Turnover (x) | 1.93 | 1.56 | 23.66 |
| Sales/Fixed Asset (x) | 3.51 | 2.62 | 34.02 |
| Working Capital/Sales (x) | 7.48 | 6.87 | 8.82 |
| Fixed Capital/Sales (x) | 0.28 | 0.38 | -25.38 |
| Receivable days | 25.58 | 32.00 | -20.06 |
| Inventory Days | 84.21 | 94.80 | -11.17 |
| Payable days | 20.30 | 45.57 | -55.45 |
| PER (x) | 0.00 | 0.00 | 0.00 |
| PCE (x) | 0.00 | 0.00 | 0.00 |
| Price/Book (x) | 0.00 | 0.00 | 0.00 |
| EV/Net Sales (x) | 0.38 | 0.50 | -23.62 |
| EV/Core EBITDA (x) | 2.75 | 3.34 | -17.63 |
| EV/EBIT (x) | 3.35 | 4.26 | -21.38 |
| EV/CE (x) | 0.55 | 0.57 | -2.94 |
| Net Sales Growth (%) | 58.07 | 20.35 | 185.42 |
| Core EBITDA Growth (%) | 46.56 | 37.53 | 24.06 |
| EBIT Growth (%) | 53.56 | 23.04 | 132.46 |
| PAT Growth (%) | 91.34 | -1.39 | 6658.40 |
| EPS Growth (%) | 49.29 | -1.39 | 3638.93 |
| Total Debt/Equity (x) | 1.13 | 1.41 | -19.75 |
| Current Ratio (x) | 1.62 | 1.45 | 12.01 |
| Quick Ratio (x) | 0.39 | 0.48 | -18.85 |
| Interest Cover (x) | 3.82 | 2.54 | 50.67 |
VALUATIONS OF THE COMPANY:
- The IPO offer of the company is currently placed at a valuation of P/E of 15.15.
- The company has registered growth with a CAGR growth of nearly 24%.
- In the same period, the company has doubled its profitability aspect.
- For the same period, their average EPS is Rs. 8.10 along with an average RoNW of 19.85%.
- The company’s IPO issue looks fully priced at a valuation of P/B Value of 3.11, NAV of Rs. 49.19
COMPARISON WITH PEERS:
| Name of the Company | Face Value | EPS | PE | RoNW | Book Value | Sales as Crores | PAT as Crores |
| Hariom Pipe Industries Limited | 10 | 10.64 | 14.38 | 21.38% | 49.79 | 254 | 15 |
| APL Apollo Tubes Ltd | 2 | 20.6 | 45.2 | 23.60% | 78.9 | 8500 | 360 |
| Hi-Tech Pipes Ltd | 10 | 30.8 | 16.8 | 12.20% | 201 | 1341 | 23 |
| Rama Steel Tubes Ltd | 5 | 16.4 | 19.5 | 13.20% | 67.8 | 470 | 12 |
| JTL Infra Ltd | 2 | 8.22 | 30.8 | 28.20% | 21.3 | 435 | 20 |
PROMOTERS:
The promoters of the company are as follows:
- Rupesh Kumar Gupta
- Sailesh Gupta
| Pre – Issue Share Holding | 99.10% |
| Post Issue Share Holding | 66% |
CONTACT DETAILS:
Hariom Pipe Industries Limited
Plot 3-4-174/12/2, 1st Floor, Samarpan Lane,
Besides Spencer’s, Pillar No. 125, Attapur,
Hyderabad – 500 048, Telangana, India
Tel: +91 40 2401 6101
E-mail: cs@hariompipes.com
Website: www.hariompipes.com
REGISTRAR:
BIGSHARE SERVICES PRIVATE LIMITED
1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis
Makwana Road, Marol, Andheri East, Mumbai – 400 059
Tel. No.: +91 22 6263 8200
Email: ipo@bigshareonline.com
Website: www.bigshareonline.com
LEAD MANAGER(S):
- ITI Capital Limited
