Hariom pipe stocks: After Hariom Pipe Industries made a strong debut on Dalal Street, demand for stocks was on, with the stock locked in a 5 percent higher circuit on April 13. The steel and iron pipe manufacturer traded at Rs 220 on the NSE, a premium of 44 per cent above the issue price of Rs 153. The BSE is quoted at a premium of 40 per cent.
Since the shares are traded in a “trade-for-trade” segment, there is a 5 percent circuit on both sides and intraday trading of these shares is not allowed, only delivery of shares is allowed.
Experts, expecting a listing gain of 10 to 16 percent, advised those who invested in the IPO to book partial gains before listing gains. Medium to long-term investors should hold the stock for better returns.
Arafat Saiyed, Senior Research Analyst at Reliance Securities, said the company is supported by strong financials and is looking to expand its capacity with the net proceeds from the sale of the stake.
“The stock is fairly valued at current levels and we are more up in the Rs 300 counter in the near term,” he added. “Investors can hold the longer term, but the new entry should only be made below Rs 200.”
Santosh Meena, Head of Research, Swastika Investmart, said the good listing can be attributed to good market sentiment and good prospects for the steel pipe industry. “The company has an integrated nature of operations, a cost-effective process and an experienced management team. However, the cyclical nature of the sector and the commoditized nature of products make it only suitable for aggressive investors in the long run. Those who signed up for quoted gains can maintain a stop-loss at Rs 195.
Astha Jain, Senior Research Analyst at Hem Securities, said investors can see partial gains and hold the remaining position for more upside. Jain sees the counter to hit the target of Rs 275-280 in short order. We recommend the investors to buy new positions in the range of Rs 180-200, he added.
Overall, the issue was subscribed to just under 8 times, thanks to heavy bids from private investors, whose quota was subscribed to 12.15 times. The HNI portion was bid 8.9 times, while the QIB allotment yielded less than twice the bids.
Hariom is an integrated manufacturer of mild steel (MS) pipes, scaffolding, HR strips, MS billets and sponge iron. It uses iron ore to produce sponge iron, which is processed at various stages into finished products – MS pipes and scaffolding – making the company’s production process cost-effective.
Hariom Pipe Industries had reported sound financial performance so far as profits grew 91.5 per cent in FY21 to Rs 15.13 crore and sales increased 58 per cent to Rs 254 crore. In the six months ending September 2021, the company posted a profit of Rs 12.87 crore on sales of Rs 200.87 crore.
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