Active Stocks
Wed Jun 19 2024 15:54:35
  1. HDFC Bank share price
  2. 1,658.00 3.06%
  1. Tata Steel share price
  2. 180.05 -0.61%
  1. State Bank Of India share price
  2. 852.60 0.95%
  1. ITC share price
  2. 423.70 -1.19%
  1. ICICI Bank share price
  2. 1,144.75 1.93%
Business News/ Markets / Vibhor Steel Tubes IPO: Experts decode key reasons behind robust 300 times subscription ahead of allotment
BackBack

Vibhor Steel Tubes IPO: Experts decode key reasons behind robust 300 times subscription ahead of allotment

Vibhor Steel Tubes IPO received overwhelming response with 298.86 times subscription, driven by the offering size, lower valuations, and merchant banker's track record, says experts.

Vibhor Steel Tubes Limited IPO price band was set in the range of ₹141 to ₹151 apiece. Vibhor Steel Tubes IPO garnered a blockbuster response, during all the three days of subscription. (https://www.vstlindia.com/)Premium
Vibhor Steel Tubes Limited IPO price band was set in the range of 141 to 151 apiece. Vibhor Steel Tubes IPO garnered a blockbuster response, during all the three days of subscription. (https://www.vstlindia.com/)

For all three days of its subscription period, Vibhor Steel Tubes IPO garnered a blockbuster response. The size of the offering, the lower valuations, and the merchant banker's track record were some of the aspects that industry experts point to as contributing to the Vibhor Steel Tubes IPO's success. Moreover, when the market is flooded with funds, applying to an appealing issue is not a challenging thing, according to experts.

Also Read: Vibhor Steel Tubes IPO allotment to be out soon; GMP rises, steps to check Vibhor Steel IPO allotment status

Vibhor Steel Tubes IPO subscription begun on Tuesday, February 13, and ended on Thursday, February 15. On the third day, Vibhor Steel Tubes IPO subscription status was 298.86 times, as per BSE data. The retail investors portion was subscribed 188.17 times, Non Institutional Investors (NII) portion was booked 721.34 times, and Qualified Institutional Buyers (QIB) portion was booked 178.73 times. The employee portion had been subscribed 201.48 times.

"On each of the parameters, the company scores high marks. and the combination resulted in phenomenal subscriptions, particularly in the high net-worth individuals (HNI) category. Unheard of numbers,"pointed out Arun Kejriwal, founder of Kejriwal Research and Investment Services.

Also Read: Vibhor Steel Tubes IPO sees stellar demand on day 3, issue booked over 298.86 times; check latest GMP

"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!

Vibhor Steel Tubes Limited IPO details.
View Full Image
Vibhor Steel Tubes Limited IPO details.

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

Vibhor Steel Tubes Limited IPO reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIB), not less than 15% 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.

Also Read: Vibhor Steel Tubes IPO receives phenomenal response on the second day, subscribed 101.42 times; GMP drops

Vibhor Steel Tubes IPO Issue Size

In terms of the issue size, the 72.17 crore mainboard issue is the smallest in a very long time, according to Arun Kejriwal, founder of Kejriwal Research and Investment Services. If we take away the anchor, the public float would be 50 crore, and you would expect a 50 crore issue to only come in small and medium-sized enterprises (SME) category.

Vibhor Steel Tubes IPO valuations

The earning per share (EPS) for the fiscal year 2023, as stated in the company's Red Herring Prospectus (RHP), were 14.85. Taking into consideration the company's upper band IPO price of 151, the price-to-earnings (P/E) ratio is around 10.2.

The P/E of the Vibhor Steel Tubes IPO is lower than that of its listed peers, who trade between a P/E of 31 and 65, including APL Apollo Tubes Ltd, Hi-Tech Pipes Ltd, Goodluck India Ltd, and Rama Steel Tubes Ltd. This meant that valuations were pretty cheaper.

The average P/E ratio for the industry peer group is 45.39, according to the company's RHP.

According to Mohit Gulati, CIO & Managing Partner of ITI Growth Opportunities Fund, Vibhor Steel Tubes is a great example of rationality in a market that is heavily influenced by bullish sentiments. The company's management is raising capital at a multiple of approximately 10x earnings, which leaves enough on the table. In comparison, other companies in the same industry are trading at a multiple of more than 25x earnings.

"The management's wisdom lies in issuing a small number of shares at this price point, which has led to massive oversubscription and increased the buzz around the counter even post-listing date.

I wouldn't be surprised if the management opts for a QIB issue in the next 12 months at a price that is 2-3 times higher than the current issue price. This is a tried-and-tested strategy, and companies such as DMART and Jubilant Foodworks have employed it in the past with great success.

Such level-headed and astute promoters instill confidence in retail investors. On listing day, it will come as no surprise if Vibhor Steel Tubes performs exceptionally well," explained Gulati.

Also Read: Vibhor Steel Tubes IPO fully booked on day 1 of bidding led by retail, NIIs; check GMP

Vibhor Steel Tubes IPO Merchant Banker Track Record

For the Vibhor Steel Tubes IPO, Khambatta Securities Limited is the book running lead manager. Arun Kejriwal explained that the merchant banker's track record was rather significant. At the issue price of 200, Khambatta Securities Limited got EMS Ltd to the primary market six to seven months ago, a company whose shares are currently trading at about 500. The stock has already increased by 150%. As a result, the perception that this merchant banker does not set prices that conflict with investors' interests supported the positive sentiment.

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 decision.

 

 

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Feb 2024, 12:58 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started