Hariom Pipe Industries Limited

As the economic activities pick pace post-pandemic, sectors such as housing and infrastructure are witnessing an uptick. Against this backdrop, Hyderabad-based integrated steel products maker Hariom Pipe Industries is looking to tap the equity markets. The company is planning to raise money to fund its capital expenditure and working capital requirements. 

The company was incorporated in 2007. Since then, the company has been able to create a brand recall, resulting in strong sales numbers. 

All about the IPO 

Hariom Pipe Industries manufactures a wide range of finished steel products, such as Mild Steel (MS) pipes, scaffolding, hot-rolled (HR) Strips, MS billets, and sponge Iron. These products are used in industries such as housing, infrastructure, agriculture, automotive solar, fabrication and engineering. 

It has a strong presence in southern and western markets and sells its products through 200 distributors and dealers. Also, the company makes MS Pipes and scaffoldings with more than 150 different specifications. 

Also, Hariom Pipe Industries has optimised its manufacturing process. The manufacturing of sponge iron has helped the company to reduce its dependence on external sources for raw materials. 

Financials  

Revenue: 37%; Net Profit: 37% (FY19-21 CAGR)

Strengths 

• The ability to change the product mix provides it with the flexibility to cater to a diverse customer base.
• Manufactures a range of products with specific thickness, length, quality and demand.
• Strong track record of profitability between FY19 and FY21, despite being marred by the pandemic.
• Well experienced promoters and senior management.

Risks 

• In the first six months of FY22, around 62% of the total revenue came from its top 10 customers.
• Operates in a cyclical industry. Downturn in the economy could lead to a decrease in demand for its products.
• Faces competition from domestic (APL Apollo Tubes and Hi-Tech Pipes) as well as large multinational companies.
• The concentration of manufacturing units in southern India. Regional slowdown and natural disasters could adversely impact the business.

Good to know 

Rapid industrialisation and urbanisation, coupled with increased private and government investment in infrastructure is expected to push up the demand for steel products. Being one of the major players in this space, Hariom Pipe Industries could benefit from these positive macro developments.