Vibhor Steel Tubes Lists At Premium Of 181% At Rs 425/Share; Should You Book Profit Or Buy?

Vibhor Steel Tubes stock makes bumper market debut: Vibhor Steel Tubes debuts the bourses on a bumper note with an 181% premium at the NSE at Rs 425 on February 20. The debut surpassed analysts’ expectations of an 86-92 percent premium on February 20. Meanwhile, the stock opened at Rs 421 on the BSE against the issue price of Rs 151.

The company’s shares were seeing a premium of 93% in the grey market. It is an illegal market where shares exchange hands before getting listed on the bourses.

The issue had received a strong response from investors, getting subscribed 320 times. High net-worth individuals (HNIs) remained at the forefront, buying 770 times the allotted quota. Retail investors picked up 200 times the portion set aside for them, while the part reserved for qualified institutional buyers was booked 191 times.

The price band for the Rs 72.17-crore issue, which opened for subscription on February 13 and closed on February 15, was fixed at Rs 141-151 a share. It was entirely a fresh issue of shares. The company will use the net proceeds to fund the working capital requirements and for general corporate purposes.

The anchor book opened for a day on February 12 in which the company raised Rs 22 crore from Saint Capital Fund, Chhattisgarh Investments Ltd, and Neomile Growth Fund-Series I.

Vibhor Steel Tubes is a manufacturer and exporter of mild steel/carbon steel ERW black and galvanised pipes, hallow steel pipes and cold-rolled steel strips/ coils. The company has a long-term agreement for six years with Jindal Pipes. Under the agreement, Jindal will provide orders with a minimum quantity of 1,00,000 tonnes per annum to fill the majority capacity of Unit I and Unit II of the company. The company has two manufacturing facilities in Raigad, Maharashtra, and Mahabubnagar, Telangana, and a warehouse in Haryana’s Hisar.

What Should Investors Do Now?

“We advise investors to book profits on the listing day and subsequently consider investing in the company after evaluating its quarterly performance in the near term,” said Dhruv Mudaraddi, Research Analyst, StoxBox.

“Despite the strong listing, the high valuation could pose potential risks in the long term. Thus, this listing is the right time for investors to exit their holdings; however, those who still want to hold are suggested to keep a stop loss at around Rs 380,” said Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.