Home » Market Spotlight » Is Vibhor Steel Tubes IPO the next big hit in 2024? Find out!

Is Vibhor Steel Tubes IPO the next big hit in 2024? Find out!

Vibhor Steel Tubes IPO has already hit a 20x subscription rate—does this market buzz signal a must-buy for your portfolio?

vibhor steel tubes pvt ltd

Vibhor Steel Tubes has announced its initial public offering (IPO), with subscriptions accepted until February 15. The entire purpose of this IPO is to raise ₹72 crore through fresh equity shares, with shares priced between ₹141 and ₹151 each. 

An approximation of ₹22 crore was successfully secured by Vibhor Steel from three anchor investors prior to the subscription opening. Let’s examine the specifics of the IPO and the advantages and disadvantages of investing in it to provide prospective investors a thorough understanding.

Overview of Vibhor Steel Tubes private limited

As a well-known manufacturer and exporter in the steel industry, Vibhor Steel Tubes specialises in 

  • ERW ( Electric Resistance Welded ) pipes, 
  • Hot-dipped galvanised pipes, 
  • Hollow section pipes & painted pipes, 
  • Crash barriers

With decades of experience, Vibhor Steel Tubes is currently one of India’s most prominent suppliers of steel pipes and tubes to the country’s heavy engineering businesses. Their wide selection of products serves many uses, such as furniture, bicycle frames, structural components, and more. With a range of dimensions, Vibhor Steel guarantees both quality and versatility in its products.

Their warehouse is located in Haryana, and they have two manufacturing operations in Telangana and Maharashtra. Since the company’s beginning, they have worked closely with Jindal pipes limited, who is their main client.

With 630 employees, the company’s internal quality team operates under the general guidance of the board of directors. To comply with international product standards, the quality control team makes sure that all quality parameters are tested on both the end product and the raw materials.

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History

‘Vibhor Steel Tubes Private Limited’ was started on April 16, 2003, under the Companies Act, 1956, by Mr. Vibhor Kaushik and Mr. Vijay Kaushik.  When it was first established as a private limited business, it made a name for itself in the steel sector by manufacturing and marketing steel pipes and tubes. 

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Vibhor Steel Tubes mission & vision

Mission:

The goal is to assist customers in developing their energy resources by providing world-class capabilities and delivering them locally.

Vibhor Steel Tubes is committed to excellence, focusing on delivering projects with precision, on time and within budget. They also insure all liabilities, ensuring complete trust and reliability.

Vision:

Vibhor Steel Tubes pvt ltd wants to become the market leader in India by providing outstanding GI and ERW pipe solutions. Beyond just commerce, the company’s basic tenet is to make a constructive impact on the nation’s socio economic structure. The foundation of their business is quality, which is evidence of the commitment of their hardworking staff.

Their goal goes beyond merely providing excellent products; it also includes acting as a catalyst for sustainable development and economic expansion. Taking on obstacles head-on, Vibhor Steel Tubes is committed to bringing about change and setting an example for the steel sector. Making a significant and long-lasting contribution to society and the environment is a goal in addition to financial success.

Vibhor Steel Tubes pvt ltd today

Since 2003, Vibhor Steel Tubes and Jindal pipes limited have established an impressive partnership. Under a renewed six-year agreement as of April 1, 2023, they manufacture and supply under the “Jindal Star” brand, with Jindal guaranteeing a minimum order of 100,000 MT per annum. Furthermore, this contract is not exclusive, giving Vibhor Steel the freedom to sell its goods on the open market under its own name.

Under its own brand, Vibhor Steel Tubes has launched a new product range called crash barriers. The company will set up a manufacturing unit in Orissa and has already received a land allotment letter in November 2023.

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Vibhor Steel Tubes financials

FinancialsSeptember 30, 2023March 31, 2023March 31, 2022March 31, 2021
Revenue after operations (in ₹ lakhs)53,051.011,11,311.9081,799.6051,046.68
Profit after tax (in ₹ lakhs)852.132,106.621,133.1168.83
Net Worth (in ₹ lakhs)10,175.549,319.797,197.296,048.99
Total borrowings (in ₹ lakhs)16,026.6312,682.5210,606.575,874.40

Vibhor Steel Tubes IPO details

IPO opening dateFebruary 13, 2024
Date of closureFebruary 15, 2024
Face value₹10
IPO price band₹141 to ₹151
Lot size99
Issue size₹72.17 crore
Fresh issue₹72.17 crore
IPO reservationsQualified Institutional Buyers (QIB)- 50%Retail Investors- 35%Non-Institutional Investors (NII)- 15%

Vibhor Steel Tubes shareholding pattern pre-issue

ShareholderShareholding percentage
Vijay Kaushik28.17%
Vijay Laxmi Kaushik30.28%
Vibhor Kaushik24.47%
Vijay Kaushik HUF10.47%
Pratima Sandhir2.39%
Vibhor Kaushik HUF1.40%
RN Securities Private Limited1.06%

Fund utilisation plan

The company plans to use the net proceeds from the issue after deducting the issue-related expenses for funding its working capital requirements of  ₹6,200 lakhs and for general corporate purposes.

Why should you consider investing?

  1. Strong partnership with Jindal pipes: The company’s long-standing relationship with Jindal Pipes guarantees a steady stream of income and sizable order volumes, providing a strong base for expansion in the future.
  2. Strategic location advantage: Due to its close proximity to important ports, particularly in Maharashtra, Vibhor Steel is able to conduct effective export operations, which increases its competitiveness in global markets.
  3. Extensive distribution network: Under the “Jindal Star” brand, the company has a vast distribution network spanning over ten countries, suggesting strong market penetration and room for growth.
  4. Stable financials: The business has seen increases in margin scaling and capacity utilisation, which supports a steady revenue forecast and demonstrates its ability to control market swings.

Factors to keep an eye out for

  1. Revenue concentration risk: If there is a significant reliance on JPL revenue, there may be a concentration risk, which could affect the viability of the firm in the case that the connection changes.
  2. Volatile cash flows: The company’s cash flow from financing and investing activities has fluctuated, which suggests that maintaining expansion and successfully managing operations may provide difficulties.
  3. Steel price volatility: Steel prices are influenced by market demand, economic conditions, and volatility, which can have an impact on the financial stability and business performance of the company.
  4. Increasing borrowings: There are worries over leverage and financial sustainability due to the three-year pattern of rising total borrowings.

Bottomline

The IPO of Vibhor Steel Tubes offers a chance to invest in a business with solid market ties and room to grow. Potential investors should, however, take financial leverage and market volatility into account. Evaluating the company’s prospects in relation to these challenges is necessary to make an informed decision.

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StockGro Team

StockGro is India’s first and largest ‘Social Investment’ platform aimed at helping you master the art of “Trading & Investment”. Trade, Invest and get rewarded to Learn everything about ‘Investments’ the fun-filled way.

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