Reblog – IPO review: Prince Pipes
IPO Snapshot:
Prince Pipes is entering the primary market on Wednesday 18th December 2019, to raise Rs. 500 crore, via an IPO of equity shares of Rs. 10 each, comprising fresh issue of up to Rs. 250 crore and an offer for sale (OFS) of up to Rs. 250 crore by promoters, in the price band of Rs. 175-178 per share. Issue, split 50:15:35 among institutional, HNI and retail investors respectively, represents 26% of the post-issue share capital and will close on Friday 20th December, with listing likely on 31st December.
Company Background:
Prince Pipes is a 30 year old, family run business, making polymer pipes and fittings at 6 plants (in Silvasa, Haridwar, Kolhapur, Chennai, Rajasthan) with total installed capacity of 2.4 lakh tonne per annum (TPA) while production capacity is assessed at 1.9 TPA. While Rajasthan plant is new (started in Q2FY20), its installed capacity is being expanded from current 6,221 TPA to 17,021 TPA by Dec 2019 and to 20,909 TPA by FY20-end. Company also plans a 51,943 TPA greenfield facility at Telangana, likely to be operational by Dec 2020, implying 28% capacity hike in the next 18 months. About less than 10% of production is also outsourced to 5 contract manufacturers (in Aurangabad, Guntur, Odisha and Bihar) as logistics cost are vital, given the bulky nature of products. Company markets its products pan-India under brands Prince and Trubore, via 1,027 distributors. Going forward, it plans to focus on plumbing and drainage segments and less on irrigation, given latter’s lower margins.