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Business News/ Markets / Ipo/  Vibhor Steel Tubes IPO: 10 key risks investors should consider before investing in Vibhor Steel IPO

Vibhor Steel Tubes IPO: 10 key risks investors should consider before investing in Vibhor Steel IPO

Vibhor Steel Tubes Limited IPO, worth ₹72.17 crore, has opened for subscription and was fully booked within an hour, with overwhelming response from retail and non-institutional investors.

Vibhor Steel Tubes IPO has opened for subscription today (Tuesday, February 13), and will close on Thursday, February 15. (
Vibhor Steel Tubes IPO has opened for subscription today (Tuesday, February 13), and will close on Thursday, February 15. (

Vibhor Steel Tubes IPO has opened for subscription today (Tuesday, February 13), and will close on Thursday, February 15. Within an hour of opening, the Vibhor Steel Tubes IPO was fully booked, with some overwhelming responsefrom retail and non-institutional investors (NIIs).

Vibhor Steel Tubes Limited IPO price band has been set in the range of 141 to 151 apiece. Vibhor Steel Tubes IPO lot size consists of 99 shares. Investors can bid for a minimum of 99 shares and in multiples thereof.

Also Read: Vibhor Steel Tubes raises 21 crore from anchor investors ahead of IPO

Vibhor Steel Tubes Limited IPO has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 35% for non-institutional Institutional Investors (NII), and not less than 35% of the offer is reserved for retail investors. The employee portion has been reserved equity shares aggregating up to 44.55 lakhs.

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Vibhor Steel Tubes IPO details.
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Vibhor Steel Tubes IPO details.

Vibhor Steel Tubes Limited is a manufacturer and exporter of mild steel/carbon steel ERW black and galvanised pipes, hollow steel pipe, and cold-rolled steel (CR) strips and coils, as stated in the company's Red Herring Prospectus (RHP). The firm has been producing, exporting, and supplying steel pipes and tubes to India's heavy engineering sectors for the past 20 years.

Also Read: Vibhor Steel Tubes IPO: Check issue dates, price band, GMP, among 10 key things to know

Since 2003, the company has collaborated with Jindal Pipes Limited. According to the revised agreement of April 01, 2023, they have been producing and supplying completed items for "Jindal Pipes Limited" (Jindal) under the brand name "Jindal Star."

Vibhor Steel Tubes Limited IPO, which is worth 72.17 crore, completely comprises a fresh issue, and there is no offer-for-sale component.

Also Read: Vibhor Steel Tubes Limited IPO announces price band at 141-151 apiece; check issue details, key dates, more

Vibhor Steel Tubes Limited IPO's sole book running lead manager (BRLM) is Khambatta Securities Ltd, and the registrar to the issue is KFin Technologies.

Here are some of the key risks listed by the company in its Red-Herring Prospectus (RHP):

  • The company and Jindal Pipes Limited have long-term agreements in place for the purchase of the items; in the event that these agreements are disrupted, the business's income and outcomes would be impacted.
  • The firm depends on Jindal Pipes Limited for a significant percentage of its income; in fact, over 90% of the company's revenue comes from just one client. Jindal Pipes Limited's business, operational outcomes, and financial situation might be significantly harmed by a cancellation, delay, or reduction in their orders.
  • The firm has long-term contracts with Steel Authority of India Limited and JSW Steel Limited, sometimes known as "Raw Material Suppliers," and as such, any disruption in those agreements would have an impact on their costs, revenues, and outcomes.
  • Their capacity to run their firm may be impacted by the restrictive covenants or conditions attached to certain of the borrowings.
  • The company has disclosed certain negative cash flows from its financing, investment, and operating operations.
  • There are times when the business fails to pay statutory obligations on time. Any more late payments of statutory obligations might result in fines from the relevant government agencies and could seriously harm the company's cash flows and financial situation.
  • The company requires a lot of working cash. There might be a negative impact on the business's operational outcomes if it does not generate enough cash flow to cover its working capital obligations.
  • Any disruption in the supply of raw materials or rise in the cost of materials, fuel, labour, or other inputs might have a negative impact on the company's profitability and operational outcomes.
  • The company's operations are mostly focused in two states, and these states' distinct characteristics have an impact on the business.
  • A significant portion of their existing assets are trade receivables and inventory. Their net sales, profitability, cash flow, and liquidity might all suffer if they don't manage the same.

Also Read: Vibhor Steel Tubes IPO fully subscribed: GMP, subscription status, review, other details in 10 points. Apply or not?

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 13 Feb 2024, 12:53 PM IST
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