Hariom Pipe Industries' IPO subscribed 67% on Day 1, Retail portion fully subscribed

The Initial Public Offering (IPO) of Hariom Pipe Industries Limited ("Company"), an integrated manufacturer of Mild Steel (MS) Pipes, Scaffolding, HR Strips, MS Billets, and Sponge Iron, received bids of 56,67,536 shares against the offered 85,00,000 equity shares, at a price band of ₹144-153, according to the data available on the BSE website. Overall the issue was subscribed 67% on the first day of bidding.

Retail investors showed interest in the IPO as the portion set aside for them was subscribed 1.88 times. The reserved portion of non-institutional investors witnessed a subscription of 0.03 times. Qualified institutional investors are yet to bid for subscriptions.

The public issue comprises issue of up to 85,00,000 Equity Shares of the Company. The proceeds from the issue worth Rs. 50.05 crore will be used for funding capital expenditure requirements; Rs. 40 crore will be used for funding working capital requirements and remaining for general corporate purpose.

Headquartered in Hyderabad, Telangana, Hariom Pipe Industries Limited manufactures steel products and has a wide distribution network in South India. The Company is an integrated manufacturer of Mild Steel (MS) Billets, Pipes and Tubes, Hot Rolled (HR) Coils Scaffolding and Sponge Iron and caters directly and indirectly to customer requirements in various sectors such as Housing, Infrastructure, Agriculture, Automotive, Solar Power, power, cement, mining and Engineering.

The offer of Hariom Pipe Industries will open for subscription on March 30 and close on April 5. The price band for the offer has been fixed at Rs 144-153 per share.

ITI Capital Limited is the sole Book Running Lead Manager to the Offer ("BRLM").

Company Information

Hariom Pipe Industries also caters to diverse end-use industries, which results in strong sales as infrastructure & agriculture sector are witnessing strong growth. The company caters to end-use industries that includes housing, infrastructure, agriculture, automotive solar, fabrication and engineering.

HPIL also focuses on backward integration of its production line by producing sponge from steel and forward integrating it into finished products. It's main focus is to use sustainable steel producing methods, reduce wastage through automation and improve power consumption metrics, increase focus on domestic consumption, use renewables more frequently and reduce freshwater usage and focus on recyclability.

The expansion of furnace will ensure availability of primary raw materials i.e. MS Billets which is used in the production of HR Strips. HR Strips are used as main raw material in its Pipe Mills. The new electric melting furnace will also help in ensuring availability of HR strips for its additional pipe mills. Thus leading to backward integration of its product line. The EBIDTA margin of the Company for Fiscal 2021 is 13.72%. The total income and profit after tax for six months period ended September 30, 2021 stood at Rs. 201.16 crores and Rs. 12.87 Crores respectively.

The company's credit rating for long term has been upgraded from 'CRISIL BBB / Stable' to 'CRISIL Triple BBB+ Outlook: Stable' (pronounced Triple B Plus with Stable outlook) by CRISIL in the fiscal 2022.

Source : Equity Bulls

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