The Vibhor Steel Tubes IPO, priced between Rs141 and Rs151 per share, will open for subscription on February 13 and close on February 15. This is an entirely fresh issue of shares and does not involve any offer for sale (OFS) component. The IPO will raise a total of Rs72 crore. The company manufactures and exports value-added steel products. It is a two-decade-old firm that has carved a niche for itself in the domestic market and overseas.
The company follows international standard manufacturing practices and has ISO accreditations. Besides, it has a robust distribution and marketing network. Its diversified product portfolio and robust quality control team are also strengths. However, the business is capital-intensive and is exposed to commodity demand cycles. Its high working capital requirements and negative cash flows from operations have resulted in losses over the last few financial years.
In addition, it is highly dependent on a single customer – Jindal Pipes Limited – which accounted for 92% of its revenue in FY23. This is a risk factor. The business is susceptible to escalation of fixed costs, and low margins leave it vulnerable to price fluctuations. It is also exposed to regulatory and foreign exchange risks.
Having said that, the management is competent and professional with vast industry experience and expertise. They have a clear roadmap for the future and are focused on improving profitability and efficiency.
However, the IPO comes with certain risks including dependence on a single large customer and lower margins. Investors should assess their financial objectives and risk tolerance before investing in the company. It is recommended to consult a financial advisor or research firm before making any investment decisions. You can check your allotment status on the official website of the registrar – KFin Technologies Limited – by entering your PAN, application number, or demat account number. You can also track the IPO allotment through the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) websites. The ASBA (Application Supported by Blocked Amount) feature of your bank account is the most convenient way to apply for an IPO.
