Hariom Pipe Industries Limited IPO

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(i) Hariom is an integrated manufacturer of Mild Steel (MS) Pipes, Scaffolding, HR Strips, MS Billets, and Sponge Iron. They use iron ore to produce Sponge Iron which is then processed across various stages to manufacture its final products viz. MS Pipes and Scaffolding making its manufacturing process cost-effective.

(ii) They cater to the southern and western Indian markets for its products. Their MS Pipes are marketed and sold in these geographies under the brand name “Hariom Pipes”. Substantial portion of the Sponge Iron, MS Billets and HR Strips produced by them are used for captive consumption in the manufacturing MS Pipes and Scaffolding.

(iii) Hariom Pipe manufacture MS Pipes and Scaffoldings of more than one hundred fifty (150) different specifications and cater, directly and indirectly, to customer requirements in various sectors such as housing, infrastructure, agriculture, automotive, power, cement, mining, solar power and engineering.

(iv) They mainly sell MS Pipes through more than two hundred (200) distributors and dealers. They also sell MS Pipes and Scaffoldings to certain developers and contractors directly as B2B sales.

(v) Their integrated plant at Mahabubnagar District in Telangana (Unit I) manufactures finished steel products from iron scrap and Sponge Iron and the other plant at Anantapur District, Andhra Pradesh (Unit II) exclusively manufactures Sponge Iron. Unit II is located near Bellary, which is one of the hubs in South India for iron ore production. The iron ore required to produce Sponge Iron at Unit II is mostly procured through the online bidding process. Most of the Sponge Iron produced at the Unit II is transported to the Unit I and used as a raw material for manufacturing MS Billets, HR Strips, MS Pipes and Scaffolding. The manufacturing of Sponge Iron at our Unit II has reduced the dependence of Hari-OM Pipes on external sources for raw materials since its acquisition in September, 2020. The integration of Unit I and II has optimized our operations and profitability through backward integration which helps with efficient logistics, inventory management, procurement, energy savings and quality control.

Strengths

  1. Experienced & Qualified Team:
  2.  Complimentary product mix
  3.  Expected High Operating Efficiency
  4.  Location of the Manufacturing Unit
  5. Product diversification & Wide Product Offering

Competitive Strengths:

  1. Integrated nature of our operations.
  2. Environment-friendly manufacturing process.
  3. The strategic location of manufacturing Units.
  4. Cost advantage in manufacturing our products.
  5. Competitive pricing of our products.
  6. Experienced & Qualified Team.

 

Objects of the Hariom Pipe Industries Limited IPO:

TheCompany proposes to utilize the Net Proceeds from the Issue towards funding the following objects: 1. Funding capital expenditure requirements; 2. Funding the working capital requirements of theCompany; and 3. General corporate purposes.
RHP of Hariom Pipe Industries Limited IPO

Hariom Pipe Industries Limited IPO Details:

Open Date: Mar 30 2022
Close Date: Apr 05 2022
Total Shares: 8,500,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 130.05 Cr.
Lot Size: 98 Shares
Issue Price: ₹ 144 - 153 Per Equity Share
Listing At: NSE,BSE
Listing Date: Apr 13 2022

Promoters And Management:

i. Pramod Kumar Kapoor, aged 70 years is the Chairman and Independent Director of the Company. He holds a Bachelor’s degree in Textile Technology from Birendra Narayan Chakrabarty University, Kurukshetra. He has more than 17 years of experience in textile industry. Previously, he has worked as President – Marketing (Textiles- Domestic Sales) in Visaka Industries Limited. Presently, he is into business of plastic manufacturing. ii. Rupesh Kumar Gupta, aged 45 years is one of the Promoters of the Company, and Managing Director of our Company. He has been the main guiding force behind the growth and business strategy of the Company. He has more than two decades of experience in steel industry. iii. Rupesh Kumar Gupta, aged 45 years is one of the Promoters of the Company, and Managing Director of the Company. He has been the main guiding force behind the growth and business strategy of the Company. He has more than two decades of experience in steel industry.

Financials of Hariom Pipe Industries Limited IPO:

Particulars (in Lakhs) Sep-21 Mar-21 Mar-20 Mar-19
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
 

Comparison With Peers:

Name of the Company Face Value EPS PE RoNW Book Value Sales (In Cr) PAT (In Cr)
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
 

Recommendation on Hariom Pipe Industries Limited IPO:

Review and Recommendation of  HariOM Limited IPO by InvestorZone is 5/10

1. Hari-OM Pipe is a Hyderabad based company, engaged in manufacturing of iron and steel products. The company has evolved into an integrated steel manufacturer with a stronghold in the South Indian market under the brand name "Hariom Pipes". 2. The manufacturing units are located strategically in Hyderabad which is close to Industrial area. Plus they have done backward integration till sponge iron stage of manufacturing. This help company to save cost and able to provide products at lower cost in the market. 3. The demand of steel for next 5 years will be driven by growth in the construction and automotive sectors. Steel is used as alloy in automotive applications, and beams and pillars in construction works. So, as both sectors grows, the demand will increase for steel too. 4. The IPO is priced at P/E of 20x based on FY21 earnings. 

Lead Manager of Hariom Pipe Industries Limited IPO:

  1. ITI Capital Limited

Registrar of Hariom Pipe Industries Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Hariom Pipe Industries Limited Plot 3-4-174/12/2, 1st Floor, Samarpan Lane, Besides Spencer’s Pillar No. 125, Attapur, Hyderabad – 500 048 Phone: +91 40 2401 6101 Email: cs@hariompipes.com Website: http://www.hariompipes.com/

Discussion on Hariom Pipe Industries Limited IPO:

3 Comments

    Hari Om Pipes has decent balance sheet, decent ROE and generating good cash from business.

    Reply

    1. The company has shown decent growth in the last 3 years. The revenue has grown from 133 Crores in FY19 to 254 Crores in FY21. CAGR growth of ~24%.

    2. PAT has also doubled from 8 Crores to 15 Crores in the last 3 years.

    3. EPS(FY21) = 7.85

    4. P/E = 20x

    Reply

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