The initial public offer (IPO) by Vibhor Steel Pipes Ltd got fully subscribed on Day 1 of the bidding process. By 11:55 am, the issue received 3,29,04,036 bids against 35,92,445 shares on the block.
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The issue received 1,57,000 applications worth Rs 400 crore as per some estimates. The quota reserved for retail portion was subscribed 14.02 times, while the Employees and NIIs portions were subscribed 14.17 times and 11.39 times, respectively.
The Rs 72.12 crore issue is being sold in the Rs 141-151 price range. Rajan Shinde, Research Analyst, Mehta Equities said the key strength of the company comes from the association with Jindal Pipes, enjoying a long standing relationship with Jindal under the brand of Jindal Star.
“Along with this rationale the capacity expansion gives long term visibility in terms of long term. Vibhor has strategic plants located near the ports helping them to focus more on exports business in future,” it said.
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Based on annualized FY24 earnings and fully diluted post-IPO paid-up capital, the company is asking a PE of 16.8 times which seems very reasonably priced by looking at its revenue and profit growth and even by comparison to its peer which are trading in the range of 30-40 times, Shinde said.
“We are positive on VSTL for the long term as both India’s Steel Tubes market offers a massive runway for growth over the next 3-5 years ahead and has diverse applications ranging from Infrastructure, Oil & Gas, Housing and Metro. More importantly, the company has a anchor customer like Jindal Pipes which we view as a positive as this ensures steady volumes and protects margins which makes its positioning very strong & will help it scale up its operations going ahead This is contra to the belief of many who think that this is a big negative as there is over dependence on one customer,” said ProfitMart Securities.
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ProfitMart Securities said: “Our reasoning is that this outsourcing benefits both Jindal Pipes & VSTL as timely sourcing of raw materials and execution of orders is crucial. Also VSTL is not sacrificing margins here & is awarded committed volumes from Jindal Pipes which enjoys a strong brand in the domestic market.”
