Vibhor Steel Tubes Limited

Vibhor Steel Tubes Limited is manufacturers and exporters of Mild Steel/Carbon Steel ERW Black and Galvanized Pipes, Hallow Steel Pipe, Cold rolled Steel (CR) Strips/ Coils.They are 2 decades old manufacturer, exporter and supplier of steel pipes and tubes to various heavy engineering industries in India. Steel pipes and tubes can be used for many purposes such as steel pipes for frames and shafts, steel pipes for bicycle frames, steel pipes for furniture, CDW pipes for shockers, steel pipes for various structural purposes, steel pipes for various engineering purposes etc. They have a very wide range of steel pipes and tubes products. The lengths of the steel pipes & tubes in different ranges unless otherwise specified by the customers. They manufacture steel pipes and tubes in various shapes and size such square, round, rectangular and elliptical or any special shape. Company are working with Jindal Pipes Limited since 2003. They manufacture & supply the finished goods for “Jindal Pipes Limited” (“Jindal”) vide the renewed agreement dated April 01, 2023 under the brand name 'Jindal Star'. They have a long-term non-exclusive agreement for the six (6) years with the Jindal. Under the agreement Jindal will provide orders with a minimum quantity of 1,00,000 MT per annum to fill majority capacity of Unit I & Unit II of the Company. Company has two manufacturing units. Unit I is located at Raigad, Maharashtra, they export 100% of export sales from  Unit  I  only.  Unit  II  is  located  around  seventy  (70)  kms  from  Hyderabad  in  the Mahabubnagar  District,  State  of  Telangana  and  close  to  Jadcherla  industrial  area. This  proximity  enables ease of logistics, power, water supply and raw materials for the operations in Unit I. Skilled personnel for Unit I also come from Hyderabad. Capacity utilisation of manufacturing facilities are 77.84%, 71.68%, 48.86% and 41.82% respectively for H1 FY24, FY23, FY22 and FY21 with total capacity of 2,21,000 MTPA. Company is setting up new manufacturing unit ( Unit III ) in Orisa with capacity of 1,20,000 MTPA ERW black and GI Pipes. So post commencement of new plant total capacity will be around 3,41,000 MTPA. As per financial performance, Vibhor Steel Tubes Limited has posted total income / net profits of Rs 511.51 Cr / Rs 0.69 Cr (FY21), Rs 818.48 Cr / Rs 11.33 Cr (FY22), Rs 1,114.38 Cr / Rs 21.07 Cr (FY23) and Rs 531.24 Cr / Rs 8.52 Cr (Q2 FY24). So as per previous financials data, company has shown good growth, but margin is very low. As company primarily manufactures products for Jindal Pipes Limited. Company has an average EPS of Rs 10.17 and average RoNW of 16.73% for last three fiscals. Issue is priced at a P/BV of 2.10 as per NAV of 71.74 as on 30.09.23. If we attribute latest earnings of FY22, FY23 annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 25.27, 13.59 and 16.80 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table.  Khambatta Securities Limited : This is 8th Main Board IPO from this BRLM. From last 7 Main Board IPOs, all opened above issue price on the day of listing. As of now, from last 7 Main Board IPOs, two are trading below issue price and remaining are trading above issue price.( As on 07.02.2024 ) As per financials, Vibhor Steel Tubes Limited has shown good growth, RoNW is 22.60% and P/E is respectively 25.27, 13.59 and 16.80 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Company is in business of manufacturing and exporting of steel pipes and tubes, which is highly competitive and fragmented segment. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Vijay Kaushik
• 2 Mr. Vibhor Kaushik
• 3 Mrs. Vijay Laxmi Kaushik
• 4 M/s. Vijay Kaushik HUF