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Vibhor Steel Tubes IPO opens: Should you subscribe or skip the issue?

Vibhor Steel Tubes Limited, a leading player in the Indian steel industry, has launched its initial public offering (IPO) with a total value of Rs 72.17 Crores.

This IPO consists exclusively of fresh shares, can be subscribed to on February 13, 2024 and closes on February 15, 2024.

The Company expects to complete the IPO allotment by Friday, February 16, 2024. The listing plans on both BSE and NSE are tentatively scheduled for Tuesday, February 20, 2024.

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Investors keeping an eye on the Vibhor Steel Tubes IPO will note that the price range is between Rs 141 and Rs 151 per share, with a minimum lot size of 99 shares required.

For retail investors, the minimum investment is Rs 14,949. However, for sNII (non-institutional investors) and bNII (qualified institutional buyers), the minimum lot size investments are higher and are Rs 209,286 and Rs 1,001,583 respectively.

GMP value

On the afternoon of February 13, 2024, the final gray market premium (GMP) of the IPO was reported at Rs 120. Given this, the estimated stock price for Vibhor Steel Tubes' IPO is expected to be around Rs 271, reflecting an expected percentage gain of around 79.47 per cent per share.

Over the last five years, the industry has witnessed steady growth with steel pipe production increasing at a compound annual growth rate (CAGR) of about 10 per cent from FY19 to FY23.

Likewise, the consumption of these products in India has steadily increased over the same period with a compound annual growth rate of 8.5 percent.

Should you register?

The Company's strategy includes diversification and expansion into new locations to mitigate operational risks and minimize the risk of fluctuations in certain geographic areas.

Despite the positive outlook, some concerns have been raised over Vibhor Steel Tubes' dependence on Jindal Pipes Limited as over 90 percent of its business is linked to this partnership. Other potential risks include disruptions in raw material supplies, high working capital requirements and historically negative cash flow.

Given these factors, brokerage firm MasterTrust recommends investors to consider a medium to long-term perspective while evaluating Vibhor Steel Tubes' IPO.

Likewise, Swastika Investmart Limited recommends a cautious “Subscribe” rating considering the company’s growth potential and expansion plans as well as the risks involved.

(Disclaimer: The views, opinions, recommendations and suggestions expressed by experts/brokers in this article are their own and do not reflect the views of India Today Group. It is recommended to consult a qualified broker or financial advisor before making any actual statements investment or trading decisions.)

Published on:

February 13, 2024

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