Vibhor Steel Tubes Limited IPO Review is coming up with its IPO issue of Rs. 72 Cr which will open on 13th February 2024. The issue will close on 15th February and be listed on the exchange on 20th February 2024. In this article, we will look at the Vibhor Steel Tubes Limited IPO Review 2024 and analyze its strengths and weaknesses. Keep reading to find out!

Vibhor Steel Tubes Limited IPO Review

About the Company

Vibhor Steel Tubes Logo Image

Vibhor Steel Tubes Limited is a 2-decade-old steel pipes manufacturer and exporter, that currently  

Supplies exclusively to Jindal Pipes Ltd and sold under the brand name Jindal Star. The Company manufactures products like Mild Steel, Carbon Steel, Hallow Steel Pipe, and a lot more.

These products are used as shaft frames in automotive, steep pipes as bicycle frames, and are also used for structural purposes. The Company renewed its agreement with Jindal Pipes on April 01, 2023. As per the agreement, Vibhor has secured a contract with Jindal for 6 Years, during which JPL will place an order for a minimum of 1 Lakh MT per annum.

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In return for this, Vibhor has agreed to sell to JPL at a discount of 2% over the Gross Sale price. The Company owns two manufacturing units, one in Maharashtra and another in Telangana. Both units will majorly run to supply steel tubes to Jindal Pipes.

The Company has an in-house team of 627 employees led under the helm of Mr. Vijay, Mr. Vibhor, and Mr. Vijay Laxmi Kaushik. These promoters have approximately 3 decades of experience in the mild steel and stainless steel welded tubes industry. 

About the Industry

India is the second largest steel producer in the world with an installed capacity of 154.1 MT in FY22. It is also the second-largest consumer of finished steel with a consumption of 120 MT in FY23. The Indian steel sector has been able to grow over the years due to the domestic availability of raw materials & effective labor.

The industry has been driven by domestic steel demand from sectors such as construction, real estate, and automobiles, while the vast coastline has enabled exports and imports, making India one of the leading countries in the global steel industry.

The production of steel tubes and pipes grew at a CAGR of about 10% in the past 5 years from FY19-FY23. Of these years, the industry has witnessed a decline only in FY21 due to the outbreak of Covid-19. During FY23, production increased by 27.3% YoY backed by healthy domestic demand.

The exports of steel tubes and pipes have grown at a CAGR of 3.6% during the past five years from 1,124 thousand tonnes in FY19 to 1,294 thousand tonnes in FY23. 

The export market has always been on a steady rise except for FY21 as the outbound shipments were affected by the pandemic. However, they grew by 20.5% YoY in FY22 after the easing of lockdown and restrictions.

During FY23, Exports increased by 8.6% YoY. A significant YoY growth of 24% in outbound shipments to the USA, amounting to 310 thousand tonnes, led to a rise in exports during FY23. 

In addition to this, shipments to UAE, Canada, Indonesia, and Malaysia also supported the export growth. During YTD FY24, the exports registered a growth of 12.4% on a YoY.

Vibhor Steel Tubes ltd – Financials

The Company reported a gross revenue of Rs. 1,113 Cr in FY23, which increased by 35% from Rs. 818 Cr in FY22. Since FY21, Vibhor’s revenue has increased at 48% CAGR.

Net Profits during the period increased by 86%, from Rs. 11 Cr in FY22 to Rs. 21 Cr in FY23. As the Company reported Net Profits of just Rs. 68 Lakhs in FY21, its Net Profits have skyrocketed to grow by 457% CAGR.

Due to the exorbitantly high cost of raw materials, the Company reported an EBITDA margin of just 4.2%, which resulted in razor-thin Net Profit Margins of less than 2%.

Due to rising input costs and high working capital requirements, the Company’s debt to equity has increased from 1.23x in FY21 to a high 1.63x currently. 

However, the return on Equity has increased from a single-digit 1.14% in FY21 to a double-digit 25.5% in FY23. Return on Capital Employed as well has increased from 10% in FY21 to 16.5% in FY23.

Vibhor Steel Tubes- Key Players 

Given below is the list of key players of Vibhor Steel Tubes. The Company is the smallest steel tube manufacturer by size, falling just behind Rama Steel Tubes.

In terms of operational efficiency, the Company is way behind its competition with an EBITDA Margin of just 4.21% as compared to an industry median of 4.48%. Goodluck India Ltd has by far the best margins at 7.19%.

Vibhor Steel Tubes- Key Players
Source: RHP of the company
Vibhor Steel Tubes- RHP of the Company
Source: RHP of the company

Strengths of the Company 

  1. Association with JPL: The Company enjoys a long-standing relationship with Jindal Pipes Ltd, which has resulted in a long-term agreement with JPL.
  2. Strategic placement of Ports: The Maharashtra unit is located close to the port, allowing the Company to manufacture its goods for export in Unit 1 itself. 
  3. Well-developed distribution: The Company exports to over 10 countries across the globe under the brand Jindal Star. VST will look towards expanding these markets in the future.
  4. Integrated Manufacturing Facility: The Manufacturing units as well as the warehouse are equipped with the latest technologically advanced tools & machines for efficiently manufacturing steel tubes.
  5. Stable Financial: With a consistent improvement in Annual capacity utilization, followed by scale in margins the Company has stably managed to increase its revenue along with margins.

Weaknesses of Company

  1. Inconsistent Cash Flows: The operating cash flows of the Company are highly volatile with bumper cash inflow in FY20, followed by a huge cash outflow in FY21. These cash flows must stabilize more to allow the Company to sustainably earn.
  2. Revenue Concentration: Most of the revenues generated by Vibhor are via its agreement with JPL. Vibhor is highly dependent on just one Company to run its operations, which leads to concentration risk.
  3. Razor Thin Margins: VST’s raw material cost hit an all-time high of 95.58% of Gross revenue in FY23. This results in the Company barely breaking even.
  4. Working Capital Requirement: The Companys working capital requirement for FY24 was Rs. 226 Cr. This has led the Company to pick up a lot of debt. Currently it. is at a debt-to-equity of 1.63x
  5. Exposure to Trade Receivables & Inventories: Due to the nature of the business, Inventories & trade receivables form a huge part of its current assets, which is roughly 60% of its total assets.

Vibhor Steel Tubes Limited – GMP

The shares of Vibhor Steel Tubes Ltd traded at a 66.89% premium in the grey market on February 7th, 2024. The shares in Grey Market traded at Rs 252. This gives it a premium of Rs 101 per share over the cap price of Rs 151.

Key IPO Information

IPO SizeRs. 72.17 Cr
Fresh IssueRs. 72.17 Cr
Offer for Sale (OFS) -
Opening dateFebruary 13, 2024
Closing dateFebruary 15, 2024
Face ValueRs. 10
Price BandRs. 141 - Rs. 151
Lot Size99 Shares
Minimum Lot Size1 Lot (99 Share)
Maximum Lot Size13 Lots (1287 Shares)
Min. InvestmentRs. 14,949
Listing DateFebruary 20, 2024

Promoters: Mr. Vijay Kaushik, Mr, Vibhor Kaushik, Mrs. Vijay Laxmi Kaushik, and M/s Vijay Kaushik Kaushik HUF

Book Running Lead Manager: Khambatta Securities

Registrar to the Offer: KFintech Ltd

The Objective of the Issue

  1. Rs. 55 Cr of the Net proceeds from the issue to be used to fund the working capital requirements of the Company.
  2. The remaining amount will be used for General Corporate Purposes.


Vibhor Steel Tubes is a manufacturer in the lucrative steel pipes and tubes industry. The industry is currently maintaining a near double-digit growth and is benefiting from quite less competitors.However, Vibhor is highly dependent on Jindal Pipes. Although it has secured a long-term supply agreement with JPL, it should look to expand operations and diversify its client base. Apart from this, the operating margins of the Company also remain a concern.

As Vibhor is not a big player it does not enjoy the negotiating power with steel manufacturers, which eventually eat up its margins. The Company does export to 10 other countries, but it is marketed under the brand Jindal Star. Due to this, Vibhor will fail to create a brand name for itself.However, the concentration risk of reliance on a single client, high working capital requirements resulting in increased debt levels, and razor-thin margins are significant weaknesses. The company also faces volatility in cash flows.

Nevertheless, at the upper price band of Rs. 151, the Company with a basic earnings per share of Rs. 14.84 will be valued at a Price to Earnings of 10.2x. So what do you think of this valuation? Do you think its too low or is it aptly priced with the risk taken in investing in the Company? Do let us know in the comments below.

Written by Nasir Hussain

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