Prince Pipes and Fittings IPO Opens. Here Is All You Need To Know

Prince Pipes IPO (initial public offering) opened for subscription on Wednesday, December 18. The Prince Pipes IPO will be open for three days till December 20. Prince Pipes has fixed the IPO price band at Rs 177-178 per share, a premium of Rs 167-168 per share over face value of Rs 10 per share. Bids can be placed for a minimum of 84 equity shares and in multiples of 84 shares thereafter. The equity shares of Prince Pipes will be listed on both BSE and NSE on December 31.

Prince Pipes and Fittings IPO: Objectives

Prince Pipes IPO has the objective of repaying outstanding loans of the company, financing the project cost towards new manufacturing facility and upgrading equipment at manufacturing facilities.

Prince Pipes and Fittings IPO: Size

The Rs 500-crore IPO comprises Rs 250 crore fresh issuance of shares and equal amount through offer for sale (OFS). A total 50% of the public issue, or shares worth Rs 250 crore, is reserved for qualified institutional buyers, while 15% (Rs 75 crore) is reserved for non-institutional investors and 35% (Rs 175 crore shares) for retail bidders.

The OFS comprises share sale worth Rs 20 crore by Jayant Shamji Chheda, Rs 140 crore by Tarla Jayant Chheda, Rs 50 crore by Parag Jayant Chheda and Rs 40 crore by Vipul Jayant Chheda, who are all promoters. Promoters held 90.06% stake in the company at the time of filing red herring prospectus and this is likely to fall down to 61.06% after the proposed IPO.

JM Financial and Edelweiss Financial Services are the book running lead managers to the issue, while Link Intime India is the registrar to the issue.

Prince Pipes and Fittings IPO: Valuations

Anand Rathi said in a note on Prince Pipes IPO that at the upper price band of Rs 178, the stock is offered at a P/E multiple of 19.25 X to its FY19 EPS of Rs.9.26. The valuation is slightly expensive, considering the debt levels in the capital structure compared to the industry peers and low margins. Even though the management believes that margins are likely increase going forward, Anand Rathi has a cautious approach towards the issue.

Prince Pipes and Fittings Financials

Prince Pipes and Fittings reported a net profit of Rs 83 crore on revenues of Rs 1,572 crore in FY19, which has grown from Rs 74 crore profit on Rs 1,330 crore revenue in FY17. In the first quarter of FY20, the company posted Rs 27 crore profit on revenues of Rs 380 crore. The company has an ROE of 20.8%.

Prince Pipes and Fittings is engaged in manufacturing of polymer pipes and fittings. The company produces four types of polymer pipes and in plumbing, irrigation, and soil, waste and rain water management.