Business Today? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?Published On: December 17, 2019
Prince Pipes, which plans to raise Rs 500 crore, will close its IPO on December 20. The IPO comprises raising Rs 250 crore through fresh issue of shares and an equal amount through offer-for-sale
Prince Pipes and Fittings will launch its initial public offer (IPO) on December 18. The IPO through which the firm plans to raise Rs 500 crore will close on December 20. The Mumbai-based polymer pipes and fittings manufacturer has fixed the price band for its IPO at Rs 177-178 per share. The book built issue comprises raising Rs 250 crore through fresh issue of shares and an equal amount through offer-for-sale (OFS).
The company’s promoter group which currently holds 90.06% stake plans to sell around 29% in the proposed IPO. One can apply for the IPO in a single lot of 84 shares. The maximum lot size stands at 13 lots in multiples of 84 shares thereafter, amounting to 1,092 equity shares.
While 50% of the shares available have been reserved for Qualified Institutional Bidders (QIB) category, 35% of the issue will be allotted to Retail Individual Investors (RII) and the remaining 15% will get allocated to non-institutional bidders (NIB).
Post the issue, shares of Prince Pipes are proposed to be listed on BSE and NSE on December 31, 2019.
Here’s? a look at what analysts said about the IPO.
Rahul Agarwal, Director at Wealth?Discovery/EZ Wealth?said, “The company has a strong brand presence with diverse product portfolio coupled with multi-location manufacturing units as well as a network of distributors pan-India. However, few risk concerns that the business may face includes competition in polymer pipes industry with galvanised iron products, increase in raw material cost and high working capital requirements.
Any increase in interest rates can affect the performance of company. Based on the last three years average earnings per share, price to equity (P/E) ratio works out to be 20.6 times for the upper price band of Rs 178. And for FY19, P/E works out to be 19 times compared to the upper price band.
Even if we take EPS? for 3 months ending in June 2019 at 2.96, P/E works out to be 15 times. Hence, the company is asking for an issue price of Rs 178 with a valuation of 15 times to 20.6 times? P/E. Its closest peer Astral Poly Technik is trading at P/E of 70 times (highest) and Finolex Industries is trading at 20 times (lowest) and the industry average P/E is 39 times. The IPO is reasonably priced and the company has a relatively consistent revenue growth (except for FY18) with a better margin show. Considering these factors, one can subscribe to the IPO with a long-term investment outlook of at least 3-5 years. However, stellar listing gains that recent IPOs have witnessed should not be expected.”
Santosh Meena, Senior Analyst at?TradingBells?said, “If we look at financials, then there is decent revenue growth of 10% CAGR whereas 30% CAGR growth in profit for last four years. If we talk about valuations, then at the upper end of price band, it is coming with trailing PE of 19 whereas its peer Astral Poly is trading at PE of 70. Another competitor Finolex Industries is trading at PE of 20 and the average PE of the industry is around 40.
So, Prince Pipes IPO is fairly priced. It is pure play of infra and real estate sector considering growth opportunities in India for this sector. One can subscribe to it with a long-term view while listing gains may depend on HNIs’ subscriptions.”
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