Vibhor Steel Tubes Limited

Vibhor Steel Tubes Limited IPO -IPO DETAILS 

Company Overview 

Vibhor Steel Tubes Limited, a manufacturer and exporter of steel pipes with over two decades of experience, currently exclusively supplies its products to Jindal Pipes Ltd under the brand name Jindal Star. The company produces a range of products including Mild Steel, Carbon Steel, Hollow Steel Pipes, among others. These products find applications as shaft frames in automotive manufacturing, bicycle frames, and for structural purposes.  

The agreement between Vibhor and Jindal Pipes was renewed on April 01, 2023, securing a six-year contract wherein JPL commits to ordering a minimum of 1 Lakh MT per annum. In return, Vibhor has agreed to provide a 2% discount on the Gross Sale price to JPL. Vibhor Steel Tubes Limited operates two manufacturing units located in Maharashtra and Telangana, primarily dedicated to supplying steel tubes to Jindal Pipes. 

Objective of the IPO 

Here are a few quick reasons why company is going public:  

1. ₹55 crore of the net proceeds from the issue will be allocated towards funding the working capital requirements of the company. 

2. Allocation of funds for general corporate purposes. 

Company Financials 

Key Performance Indicator 

Pros 

1. The company has fostered a longstanding partnership with Jindal Pipes Ltd, culminating in a durable agreement with JPL. 

2.  The Maharashtra facility is strategically located near a port, facilitating direct exportation from Unit 1. 

3. Under the esteemed brand Jindal Star, the company exports its products to over 10 countries worldwide and aims to broaden its market reach further. 

4. Equipped with state-of-the-art technology, both manufacturing units and the warehouse ensure efficient production of steel tubes. 

5. Demonstrating consistent improvement in annual capacity utilization and margin scaling, the company has achieved steady revenue and margin growth. 

Cons 

1. The company's operating cash flows exhibit significant volatility, experiencing a substantial cash inflow in FY20 followed by a considerable outflow in FY21. Achieving greater stability in these cash flows is imperative for sustainable earnings. 

2. Vibhor heavily relies on its agreement with JPL for the majority of its revenue generation, posing a concentration risk as its operations are highly dependent on a single company. 

3. VST faces challenges with razor-thin margins, as its raw material costs reached a record high of 95.58% of gross revenue in FY23, resulting in minimal profitability. 

How to Apply for this IPO 

1. Go to https://ipo.adityatrading.in/ 

2. Enter your Client ID 

3. Enter the OTP received in your registered mobile number. 

4. Choose the IPO and click on apply button. 

5. Enter the UPI ID, Quantity, and Cut off the price. 

6. Click on submit button 

7. Confirm the mandate request received on your phone by entering the UPI Pin. 

You can also watch our youtube video on “How to Apply on IPO” by clicking on the link “https://www.youtube.com/watch?v=1qOI8dCpl1I&ab_channel=ATS”