GMP stands for ‘Give Me Premium’, and indicates that the shares are expected to price at or above the IPO issue price. GMP stocks usually open higher than their IPO issue price and stay higher for some time post-listing. This is a positive indicator of investor sentiment and indicates that demand for the stock is strong.
Vibhor Steel Tubes IPO opens on 13 February 2024 and closes on 15 February 2024 (both days inclusive). The IPO listing date is on 19 February 2024 (NSE & BSE). The minimum market lot size is 99 shares and retail-individual can apply up to 13 lots (1287 shares or Rs194,337). The application process is simple using your online bank account and the ASBA (Application Supported by Blocked Amount) feature.
The company was incorporated in the year 2003 and manufactures, exports, and supplies steel pipes for various heavy engineering industries in India. The product portfolio includes ERW pipes in mild steel/carbon steel in black and galvanized finish, hollow steel pipes, cold rolled steel coils, and crash barriers. The company has 2 manufacturing plants located in Raigad, Maharashtra, and Mahabubnagar district in Telangana.
Founded by three first-generation entrepreneurs with decades of experience, the company is rapidly growing into a leading domestic and export player in the steel pipe and tube industry in India. With a long-term supply agreement with Jindal Pipes Limited, the company has a strong customer base in the automobile sector as well as steel structures and construction projects. Their in-house quality team of 627 dedicated personnel ensures strict compliance with international product standards.
While the company’s revenue growth has been robust and stable, its net margins are below the industry average due to front-end of costs. Nevertheless, ROE and ROA are attractive given the company’s high growth prospects and low capital base.
Vibhor’s reliance on Jindal and its risk of insolvency are key risks that could affect the business. The company is also susceptible to commodity prices and the impact of legal proceedings on its financials.
The company expects to use the proceeds from the IPO for funding working capital requirements, expansion, and general corporate purposes. The net proceeds of the IPO are estimated to be around INR 6,200 crore. The company intends to allocate up to 50% of the funds to Qualified Institutional Buyers (QIB) which include major financial institutions, insurance companies, mutual funds, and pension funds.
The remaining funds will be allocated to Non-Institutional Investors (NII) and Retail Individual Investors. The IPO will be available for subscription in both cash and non-cash form. The allotment will be done on a proportionate basis to the application money received. Refunds will be initiated by the company based on allotment and credit to the demat accounts will take place based on allotment.