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Hariom Pipe IPO opens: Should you Apply or Avoid?

March 30, 2022 02:15 PM

Hariom Pipe IPO open: Should you Apply or Avoid?
The company sells and markets MS pipes in the western and southern parts of India under the 'Hariom Pipes' brand name through more than 1,400 distributors and dealers.

The initial public offering (IPO) of Hariom Pipe kicked off for subscription from today. The company, which is likely to raise Rs 130.05 crore via its maiden stake sale, is selling 8,500,000 fresh equity shares in the price range of Rs 144-153 apiece.

Hariom Pipe manufactures iron and steel products including mild steel (MS) pipes, scaffolding, HR strips, MS billets and sponge iron. The company sells and markets MS pipes in the western and southern parts of India under the ‘Hariom Pipes’ brand name through more than 1,400 distributors and dealers.

Majority of the analysts are positive on the issue and have recommended subscribing to it. However, a few of them have a word of caution for investors.

Market participants are bullish on the company’s sound business profile and strong fundamentals but say that rich pricing and high competition makes it an aggressive bet for conservative investors.

With an experienced and qualified management and competitive pricing of products, Hariom Pipe has the potential to maintain its double-digit growth path, said brokerage firm Reliance Securities.

Also Read : Hariom Pipe IPO : Dates, Issue Price, GMP, Subscription, Share Analysis and Allotment

Citing capacity expansion, extensive distribution network, decent financials, likely margin improvement from the current level and valuation comfort compared to peers, it gave ‘subscribe’ rating to the issue.

“Looking after the financial performance of the company and valuations, the issue looks decent. Hence, we recommend ‘Subscribe’ on issue,” Hem Securities said.

Considering the FY22 (annualised) and FY21 EPS of Rs 10.10 and 5.94 on a post issue basis, the Hariom Pipe company is going to list at a P/E of 15.14x and 25.76x, respectively, with a market cap of Rs 389.8 crore whereas its peers, namely JTL Infra and APL Apollo Tubes, are trading at PE of 30.5x and 44.3x, respectively, said Marwadi Financial Services in its pre-IPO note.

“We assign ‘Subscribe (With Caution)’ rating to this Hariom Pipe IPO as the company’s backward integration of production process provides a cost advantage over its competitors and is available at reasonable valuation as compared to its peers,” it added.

Also Read :  Hariom Pipe Industries prices IPO at Rs 144-153 a share

Swastika Investmart said the company has a good distribution network, strong brand recall, vertically integrated plant and experienced promoter team. The issue is reasonably priced at a PE band of 13.5x to 14.3x FY21 EPS compared to its listed peers, it said.

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