Prince Pipes & Fittings IPO: Here’s All You Need To Know
Prince Pipes & Fittings Ltd. will launch its three-day initial public offering on Wednesday as it plans to repay loans and promoters look to pare holdings.
The maker of polymer pipes and fitting plans to raise Rs 500 crore by selling 2.81 crore equity shares at Rs 177-178 apiece, according to its red herring prospectus. The maiden offer consists of a fresh issue and an offer-for-sale by four promoters.
At Rs 178 a share, the promoters plan to sell:
- Jayant Shamji Chheda: 11.23 lakh shares
- Tarla Jayant Chheda: 78.65 lakh shares
- Parag Jayant Chheda: 28.08 lakh shares
- Vipul Jayant Chheda: 22.47 lakh shares
The IPO values the company at nearly Rs 1,958 crore at the upper end of the price band, according to BloombergQuint’s calculations. After the offer, the promoter shareholding will fall to 65.8 percent from 90.06 percent. The rest will be held by public shareholders.
The company said it would use the net proceeds from the fresh issue to repay or prepay certain outstanding loans, finance the project cost for setting up a new manufacturing facility, upgrade equipment at existing units and general corporate purposes.
Prince Pipes, according to its red herring prospectus, is the country’s sixth largest pipemaker by market share. Incorporated on Nov. 13, 1987, the company manufactures fittings using unplasticised polyvinyl chloride, chlorinated polyvinyl chloride and polypropylene; and pipes using these three polymers and high-density polyethylene.
The Mumbai-based company markets its products under Prince Piping Systems and Trubore. As on Oct. 31, the company sold Prince Piping Systems products to 1,151 distributors in India and Trubore products to 257 wholesalers and retailers.
Prince Pipes has six manufacturing facilities with a total installed capacity of 241,211 tonnes per annum. The company also plans to set up a new plant in Sangareddy, Telangana with a total estimated installed capacity of 51,943 tonnes per annum.
The company’s net sales and profit after tax grew at an annualised rate of 13 percent and 41 percent, respectively, over the last four financial years, according to the red herring prospectus.
Its Ebitda margin, too, expanded from 9.2 percent in 2015-16 to nearly 14 percent as on June 30, 2019.
WATCH | How Prince Pipes plans to use IPO proceeds
Supreme Industries Ltd., Finolex Industries Ltd. and Astral Poly Technik Ltd. are listed peers of Prince Pipes. The company has managed to outpace its peers over financial years ended 2016 to 2019.
As of March 2019, the company’s shares were valued at nearly 20 times its current price-to-earnings. That’s cheaper compared to most of its peers.