Hariom Pipe Industries Limited (HPIL)
Core Competency
Hariom Pipe Industries Limited (HPIL) is a manufacturer of structural, conveyance and multiple industrial steel Pipes & Tubes. The company product portfolio includes MS Billets, GP, GI, MS Pipes and Tubes, HR and CR Coils, Galvanized Coils, etc. Its product range includes round, square, rectangular, D-shaped pipes, and railing pipes.
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In April, 2022, Company came out with a public issue of 85,00,000 Equity shares at a Price of Rs 153 per shares. It also made a Preferential Issue of 21,44,000 Equity Shares of Rs 10/- at a price of Rs 345/- per Share and 33,71,000 Convertible Warrants at a price of Rs 345/- per warrant in March,2023.
The company started its operations almost one and half decades backs with a MS billets manufacturing furnace, and expanded its capacities over the years into hot-rolled (HR) strips, MS tubes and scaffoldings. In Fy2021, company started manufacturing of MS sponge iron as a backward integration.
In December, 2022 it acquired R.P. Metal Sections Private Limited, based in the SIPCOT Industrial growth Centre, Tamil Nadu for an all cash consideration of Rs 55 crore to start manufacturing of Galvanized Pipes and Cold Roll Coils.
HPIL had established itself as a premium manufacturer of iron and steel products mainly catering to the South Indian market. As of March, 2023, company has a total manufacturing capacity of 533232 MT, that including capacities of rolling, piping, GP and CR mills. It has more than 655 retail distributors across the South Indian states.
Work in Progress
Company’s HR Strips manufacturing unit applying the most modern manufacturing technology that results in best-in-class HR strips for their exceptional quality and durability. It’s MS Tubes & Pipes Using strips of Hot-Rolled steel, which employ advanced forming rolls to create a wide range of superior-quality pipes and tubes. Company also offers custom-made scaffolding solutions to elevate and support workers and materials during construction, repair or maintenance activities. Its scaffolding products are designed to meet the customers’ unique requirements.
Continuous capacity additions, backward integration and expanding sales network are the major strengths of the company. Acquisition of R.P. Metal Sections Private Limited helped the company to expand its capabilities to manufacture Galvanized Pipes and Cold Roll Coils as well as this strategic move expands its geographical reach across TN. HPIL is planning to enhance its geographical presence through widening product portfolio and targeting markets with high growth potential.
Aggressive pricing through backward integration is another competitive advantage of the company. In addition to this, unlike its competitors, HPIL has the manufacturing flexibility to customize its products in terms of thickness, length and quality of its products. This unequalled advantage gives the company to offer tailored products that meet the specific needs of its customers, and stands unique among the market.
Fundamental Data
Annual Consolidated Financial Highlights
FY: 2023
Total Revenue: ₹ 644.46 Cr
EBITDA: ₹ 82.63 Cr
PAT: ₹ 46.21 Cr
Quarterly Consolidated Financial Highlights
FY: 2023 Q1
Total Revenue: ₹ 241.23 Cr
EBITDA: ₹ 29.23 Cr
PAT: ₹ 15.44 Cr
Future Outlook
HPIL is undergoing expansion for its value-added product range. Company also built a modern CR mill and a galvanized pipe fabrication plant in Hyderabad. The full benefits of these expansions will starts from FY24. HDFC Bank already sanctioned credit facilities of Rs 197 crore to the company as part of the capital requirement of its expansions.
The steel industry in India is witnessing steady growth during the past couple of years both in production and consumption and India now holds the position of the world’s second-largest producer of crude steel. This growth would be driven by strong government expenditure on infrastructure development, initiatives such as ‘Smart Cities’ and ‘Affordable Housing’ as well as building of industrial corridors. Further investment for these sectors will boost India’s steel demand definitively, going forward. Government’s support to development of the steel industry is expected to come through the ‘Make in India’ initiative, which aims to transform India into a global design and manufacturing hub. Apart from this, the PLI scheme for steel sector, which will be applicable from FY2023-24 to FY2028-29, is expected to benefit the domestic steel manufacturers.
Major Risk Factors
The stock valuation is expensive with a ROCE of more than 12 and a score of 3.4 enterprise value to capital employed. Most of the orders are government sourced and delays in implementation and execution may be a key factor.
Sector: Industrials
Market Price: Rs. 649.60 as on today
FV: ₹10/-
Stock Name: Hariom Pipe Industries LTD
BSE Code: 543517, NSE Code: HARIOMPIPE
Market Cap.: Rs 1720 Cr
Book Value: ₹ 135.49
Segment: Iron & Steel Products
Incorporation: 2007
Headquarters: Hyderabad, Telangana
Employee Strength: 328
