Equity | India |

IPO
Hariom Pipe Industries Ltd
Note
SUBSCRIBE March 30,2022

Details of the Issue Company Background

Pr ice Band ₹ 144 – ₹153
Issue Size ₹ 130 Cr Hariom Pipe Industries Ltd (‘Hariom’) was incorporated on 21th June, 2007. Company is an integrated
Face Value ₹ 10 manufacturer of M ild Steel (M S) Pipes, Scaffolding, HR Strips, M S Billets, and Sponge Iron. It uses iron
Bid Lot 98
ore to produce Sponge Iron which is then processed across various stages to manufacture final products
Listing on BSE, NSE
viz. M S Pipes and Scaffolding helps making manufacturing process cost -effective.
Post Issue Implied
Rs. 390 Cr
Mcap -Upper Pr ice
Investment Range Rs.14,112 – 14,994 Business Verticals and Products
Companies Products are marketed and sold in these geographies under the brand name “Hariom
Im portant Indicative Dates (2022)
Pipes”. Companies serves to the southern and western Indian markets for its products. Hariom
Opening 30-Mar
manufactures more than 150 different specifications of products.
Closing 05-Apr
Hariom have following Products:
Basis of Allotment 08-Apr
Refund Initiation 11-Apr
• Sponge Iron
Cr edit to Demat 12-Apr • M S Billets
Listing Date 13-Apr • HR Strips
• M S Pipes
• Scaffolding, Tube Accessories and Fittings
Lead M anag ers

ITI Capital Ltd Utilization of IPO Proceeds:

• Company floated a fresh issue of Rs 130 Cr, of which Rs 50 are to be utilized for Funding c apital
expenditure requirements and Rs 40 Cr are for Funding the working capital requirements.

No. of Fr esh Shar es to be issued

Promoters:
No of Shar es 85,00,000
• Company is promoted by M r. Rupesh Kumar Gupta and M r. Sailesh Gupta and are third generation
entrepreneurs having individually more than a decade of experience in the iron and steel industry.
Offer Details
• M r. Pramod Kumar Kapoor is Chairman and Independent Director of the company. holding 17 years+
Offer Size Rs.130 cr
experience in textile industry. Presently, he is into business of plastic manufacturing.
Fr esh Issue Rs. 130 Cr (100%)
OFS Rs 0 cr (0%)
Key Managerial Persons:
• M r. Amitabh Bhattacharya is the Chief Financial Officer of the company. Holds 14 years+ experience
No of In Rs Cr % of
Type in diverse industries including textiles, tire and logistics. He has been associated with the company
shar es Lo w er Upper Issue
QIB 2,550 36.72 39.02 30%
since June 21, 2007.
NIB 2,975 42.84 45.52 35% • M r. Chirag Partani is Company Secretary and Compliance Officer of company. He has professional
Retail 2,975 42.84 45.52 35% experience of over 4 years in the field of secretarial work and corporate law compliances, and
Total 8,500 122.40 130.05 100% associated with Hariom since 2017.

Pr e-Issue Po st-Issue
Type No. % of No. o f % of Company’s Strength
Shar es Total Shar es To tal
Pr omoter 7130 42% 7130 28%
Strategic location of manufacturing Units
P. gr oup 9692 57.1% 9692 38%
Unit I is located around 70 kms from Hyderabad in the M ahabubnagar District, State of Telangana and
Public 153 0.9% 8653 34%
close to Jadcherla industrial area. Unit II is located at Anantapur District, Andhra Pradesh which is
Total 16976 100% 25476 100%
around 18 kms from Bellary, which is one of the hubs in South India for iron ore production.
Source: RHP, GEPL Research

Cost advantage in Products Manufacturing.

It has established a manufacturing process which helps to keep costs low and competitive to others
in the industry. It has 32 KVA dedicated feeder for furnace at Unit I which helps it eligible for obtaining
private power from IEX through the online bidding process, against contracted load of 9,999 KVA with
TSSPDCL with fixed power cost.

Integrated nature of operations.

Company uses iron ore to produce Sponge Iron which is then processed across various stages to
manufacture its final products viz. M S Pipes and Scaffolding their manufacturing process cost-
effective. The integrated nature of operations is one of the major strengths and differentiators of the
Hariom.

1
Equity | India |

March 24,2022

Strategies for Growth

Expand geographical network

Hariom is presently serving the markets of Southern and some parts in Western India. IT aim to further
develop domestic sales networks in those territories where there are lower transportation costs having
a significant demand of products, where company can sell at price-points that can effectively offset
higher transportation costs.

Expand Manufacturing Capacity

It has embarked on a phase of growth to build scale and expand its portfolio of value-added products
This expansion will increase Its M S Pipe capacity from the present 84,000 M TPA to 1,32,000 M TPA.
Company will also be expanding Furnace Unit capacity which will enhance capacity to the extent of
1,04,232 M TPA from the existing capacity of 95,832 M TPA.

Increase Product Range

Currently, it has M S Pipes and Scaffoldings that are the end products manufactured from the
conversion of Sponge Iron to HR M S Billets and HR Strips. Company intends to further enhance value
proposition by manufacturing value added products to have better margins and wider market
acceptance.

Financial Snapshot

As of 30 Sep -
Particulars 2021 2020 2019
21
Equi ty Share Ca pital 16.98 16.96 13.23 13.23
Res erves 66.75 53.83 35.07 22.86
Net worth a s stated 83.72 70.79 48.30 36.09
Revenue from Operations 200.87 254.14 160.78 133.60
EBITDA a s stated 25.86 34.97 23.86 17.35
EBITDA (%) as s tated 12.8% 13.7% 14.8% 12.9%
Profi t Before Tax 17.71 21.20 11.33 11.65
Net Profi t for the period 12.87 15.13 7.91 8.02
Net Profi t (% )as s tated 6.4% 5.9% 4.9% 6.0%
EPS (₹ ) 15.12 10.64 5.98 7.34
RoNW (%) 15.4% 21.4% 16.4% 22.2%
Net As s et Value (₹ ) 49.19 49.79 36.50 33.01

View and Recommendation

 Hariom’s annualized Post tax earnings arrives at ~Rs 25 Cr. which makes an Earnings multiple
of 15.6(x) (on basis of Post Issue Implied M cap). Which is decent compared with its peers.
Company has leading ROE of 21.3% amongst listed industry peers followed by JT L infra
(20.7%).
 It plans to Expand its footprint along with introducing newer products and capacity expansion
at its Unit-1 for M S pipe, this provides revenue visibility for the company ahead.
 In most cases M etal and allied companies are volatile in terms of margins, due to Operational
and Financial leverage. In case of ‘Hariom’ Company, it has maintained a stable EBITDA
margin ranges from 12% to 14%. Shows its strong grip on Operations and effective cost
control.
 Issue is fairly priced compared with peers. We assign SUBSCRIBE rating to the Issue.

2
 Equity | India |

March 24,2022

NOTES :

GEPL Capital Pvt. Ltd (formerly known as Gupta Equities Pvt. Ltd.)
Head Office: D-21/22 Dhanraj Mahal, CSM Marg, Colaba, Mumbai 400001
Reg. Office : 922-C, P.J. Towers, Dalal Street, Fort, Mumbai 400001

Resear ch Analyst – M r . Har shad D. G adekar, + 022-6618 2685, Har shadg adekar@geplcapital.com

Disclaim er:
This r epor t has been pr epared by GEPL Capital Pr ivate Limited ("GEPL Capital "). GEPL Capital is r egulated by the Secur ities and Ex change Boar d of India. This r epor t does not constitute
a pr ospectus, offer ing cir cular or offer ing memor andum and is not an o ffer or invitation to buy or sell any secur ities, nor shall par t, or all, of this pr esentation for m the basis of, or be
r elied on in connection w ith, any contr act or investment decision in relation to any secur ities. This r eport is for distribut ion only under such cir cumstances as may be per mitted by
applicable law . Nothing in this r epor t constitutes a r epresentation that any investment strategy, r ecommendation or any other content contained her ein is suitable or appr opr iate to a
r ecipient’s individual cir cumstances or otherwise constitutes a per sonal recommendation. All investments involve r isks and investors should ex ercise pr u dence in making their investment
decisions. The r epor t should not be r egar ded by the r ecipients as a substitute for the ex ercise of their ow n judgment. Any opinions ex pr essed in this report are subject to change
w ithout notice and may differ or be contr ar y to opinions ex pressed by other business areas or groups of GEPL Capital as a r esult of using differ ent assumptions and cr iter ia. GEPL Capital
is under no obligation to update or keep cur r ent the infor mation contained her ein. The secur ities descr ibed her ein may not be eligible for sale in all jur isdictions or to cer tain categories
of investor s. Options, der ivative pr oducts and futur es are not suitable for all investor s, and tr ading in these instruments is considered r isky. Past per formance is not necessarily indicative
of futur e r esults. For eign cur r ency r ates of ex change may adver sely affect the value, pr ice or income of any secur ity or r elated instrument mentioned in this r eport.
Any pr ices stated in this r eport are for infor mation purposes only and do not r epr esent valuations for individual secur ities or other instruments. Ther e is no representation that any
tr ansaction can or could have been effected at those pr ices and any pr ices do not necessar ily r eflect GEPL Capital’s inter nal books and r ecor ds or the or etical model-based valuations
and may be based on cer tain assumptions. Differ ent assumptions, by GEPL Capital or any other sour ce may yield substantially differ ent r esults. GEPL Capital makes no r epr esentation
or w arranty, ex press or implied, as to, and does not accept any r esponsibility or liability w ith r espect to, the fair ness, ac cur acy, completeness or cor r ectness of any infor mation or
opinions contained her ein. Fur ther , GEPL Capital assumes no r esponsibility to publicly amend, modify or r evise any for w ard-looking statements, on the basis of any subsequent
development, infor mation or events, or other wise. Neither GEPL Capital nor any of its affiliates, dir ector s, employees or agents accepts any liability for any loss or damage ar ising out
of the use of all or any par t of this r epor t. In no event shall GEPL capital be liable for any dir ect, special indir ect or co nsequential damages, or any other damages of any kind, including
but not limited to loss of use, loss of pr ofits, or loss of data, w hether in an action in contr act, tor t (including but not limited to negligence), or other w ise, ar ising out of or in any w ay
connected w ith the use of this r epor t or the mater ials contained in, or accessed thr ough, this r epor t.
GEPL Capital and its affiliates and/or their officer s, dir ector s and employees may have similar or an opposite position in any secur ities mentioned in this document (or in any r elated
investment) and may fr om time to time add to or dispose of any such secur ities (or investment). The disclosur es contained in the r epor ts produced by GEPL Capital shall be str ictly
gover ned by and constr ued in accor dance w ith Indian law . GEPL Capital specifically pr ohibits the r edistribution of this mater ial in w hole or in par t w ithout the w r itten per mission of
GEPL Capital and GEPL Capital accepts no liability w hatsoever for the actions of thir d par ties in this r egard.