Vibhor Steel makes an impressive debut, listing over 181% higher than the issue price

Vibhor Steel Tubes had an impressive market debut, opening at a 181 percent premium over the IPO price on February 20. The stock began trading at Rs 425 on the NSE and Rs 421 on the BSE, surpassing analysts’ expectations of an 86-92 percent premium.

Before the listing, shares were trading at a 92 percent premium in the grey market, an informal platform where shares trade before IPO allotment and continue until listing day. Many investors monitor the grey market premium (GMP) to gauge the potential listing price.

Investors showed significant interest in the IPO, subscribing to it 320 times. High net-worth individuals (HNIs) led the subscriptions, oversubscribing their quota by 770 times. Retail investors also participated enthusiastically, oversubscribing by 200 times, while qualified institutional buyers showed strong interest, oversubscribing by 191 times.

Financial Performance

The IPO, valued at Rs 72.17 crore, was open for subscription from February 13 to 15, with a price range of Rs 141-151 per share. It consisted solely of fresh shares. On February 12, the anchor book opened for a day, raising Rs 22 crore from Saint Capital Fund, Chhattisgarh Investments Ltd, and Neomile Growth Fund-Series I.

For the six months ending September 30, 2023, the company recorded revenue of Rs 530.51 crore, net profit of Rs 8.52 crore, and EBITDA of Rs 23.69 crore. During this period, PAT margin was 1.61 percent, EBITDA margin was 4.47 percent, debt-to-equity ratio was 1.83 times, RoCE was 6.97 percent, and RoE was 8.37 percent.

Vibhor Steel Tubes manufactures and exports mild steel/carbon steel ERW black and galvanized pipes, hollow steel pipes, and cold-rolled steel strips/coils. It holds a six-year agreement with Jindal Pipes and operates manufacturing facilities in Raigad, Maharashtra, and Mahabubnagar, Telangana, along with a warehouse in Hisar, Haryana.

Objectives of the Vibhor Steel IPO

The funds raised from the new shares will support the company’s working capital needs and general corporate expenses.

Khambatta Securities served as the book-running lead manager for the IPO, with Kfin Technologies acting as the registrar.

Contextual information

Vibhor Steel Tubes manufactures and exports mild steel/carbon steel ERW black and galvanized pipes, hollow steel pipes, and cold-rolled steel strips/coils. The company has a six-year agreement with Jindal Pipes, ensuring a minimum annual order quantity of 100,000 tonnes to fill the majority capacity of its manufacturing units. These units are located in Raigad, Maharashtra, and Mahabubnagar, Telangana, with a warehouse in Hisar, Haryana.

You might also be interested in – Adani Realty secures ₹30,000 crore contract for Bandra Reclamation redevelopment in Mumbai