Prince Pipes IPO ( Prince Pipes and Fittings IPO) IPO comprises ₹250 crore through fresh issue of shares and an equal amount through offer-for-sale aggregating to ₹500 crore. Prince Pipes is a leading polymer pipes and fittings manufacturers in India. Post issue, Prince Pipes IPO, the promoters’ holding in the company will come down to 65.80 per cent from 90.06 per cent.

Prince Pipes IPO Details

Issue PeriodDec 2 – Dec 4, 2019
Anchor Investor Bidding 29th November, 2019
Issue Size DetailsRs. 750 Cr
Price BandRs.  36 – 37
Bid Lot400 Equity Shares 
UFSL Shareholders ReservationEquity Shares of Rs. 75 Cr
UFSL Shareholders Discount₹ 2/- per Equity Share
Issue Structure : 
QIB75% of the Net offer 
NIB15% of offer-  27,364,864 Shares-  Rs. 101.25 Cr
Retail10% of Net offer- 18,243,243 Shares ₹ 67.50 Cr)
BRLMsKotak Mahindra Capital, IIFL Securities, JM Financial
RegistrarKarvy Fintech Pvt. Ltd.

Updates

  • Anchor Investors: Prince Pipes raised Rs 150 crore from eight anchor investors i.e. SBI Oman, Aditya Birla MF, SBI Life Insurance, HDFC Life Insurance, Mirae Asset MF, HDFC MF, Tata MF and NewMark Capital.
  • Day1 : Subscribed .28x times

About Prince Pipes and Fittings

  • Incorporated in 1987, Mumbai based Prince Pipes and Fittings Limited is engaged in manufacturing of polymer pipes and fittings.
  • The company produces four types of polymer pipes including CPVC, UPVC, HDPE, PPR and three different polymer fitting types CPVC, PPR, and UPVC.
  • Prince Pipes operates in the polymer pipe segment under two brand names, Trubore and Prince Piping Systems.
  • The company has and a strong presencei n North, South and West India.
  • Prince Pipes products are used for varied applications in plumbing, irrigation, and soil, waste and rain water management. Their product range addresses the requirements of both the rural and urban markets.
  • As at October 31, 2019, they sold their Prince Piping Systems products to their 1,151 distributors in India and sold their Trubore products to their 257 wholesalers and retailers.
  • From January 2015, Wavin Overseas B.V., a Netherlands based company has been providing Prince Pipes with the technology and know-how in the manufacture of the products.
  • It has 5 manufacturing units located at Haridwar (Uttarakhand), Athal (Dadra and Nagar Haveli), Dadra (Dadra and Nagar Haveli), Kolhapur (Maharashtra) and Chennai (Tamil Nadu).Further there are 2 contract manufacturing units are located at Hajipur (Bihar) and Aurangabad (Maharashtra).
  • The company is also planning to open two manufacturing units at Jobner (Rajasthan) and Sangareddy (Telangana). Prince Pipes and Fittings Ltd has 10 warehouses to store the products.

Prince Pipes and Fittings: Financials

Particulars/ Rs Cr.3mFY20FY19FY18FY17
Revenue 379.771,571.871,320.551,330.02
EBITDA52.71185.91163.34162.63
EBITDA (%) 13.88%11.83%12.37%12.23%
Profit Before Tax33.93111.4795.1795.91
Net Profit26.6783.3572.7774.18
Profit Margin7.02%5.30%5.51%5.58%
Equity Share Capital90.0290.0290.0245.01
Reserves as restated330.39303.46219.31190.69
Net worth as stated420.41393.48309.33235.7
Long Term Borrowings98.18105.77146.19105.76
Short Term Borrowings160.93145.68169.83188.76
RONW(%)6.34%21.18%23.52%31.47%
Net Asset Value (₹ )46.743.7134.3652.37
Debt to Equity0.70.741.151.33
EPS (₹ )2.969.268.087.85
Post Issue Equity110.11
FV10
IPO Price178
EPS (post IPO)-fy197.57
PE (Post IPO)23.51

Prince Pipes IPO: Salient Points

  • Prince Pipes and Fittings raised Rs. 106 crore in pre-IPO placement @Rs. 178 per share, from South Asia Growth Fund. The amount raised represents 6.2% of pre-IPO equity. Now Prince Pipes and Fittings is raising Rs. 250 crore as fresh issue proceeds.
  • This amount will be used towards:
    • Rs. 48 crore of part debt repayment
    • Rs. 184 crore towards greenfield injection moulding plant at Telangana
    • Rs. 82 crore to upgrade existing plants etc.

Prince Pipes and Fittings IPO: Assessment

  • Prince Pipes and Fittings, one of India’s leading pipe and fitting manufacturers,
  • The company faces significant competition from organized and unorganized pipe manufacturers.
  • Two of the promoters, Jayant Shamji Chheda, who is also CMD and Heena Parag Chheda, are also partners in Aditya Developers, against which Montana Developers Private Limited have issued legal proceedings involving damages up to Rs 904.6 crore and criminal punishments.
  • Promoters have a pledge on about 35% of shares, and further 16% shares as non-disposal undertaking for securing loans worth Rs. 1.95 bn under promoter entity – Express Infra Projects LLP . These shall get reduced after payment from OFS proceeds.
  • Its valuations are in-line with peers like Finolex Industries and PE demanded is slightly higher.
  • Prince Pipes and Fittings margins are lower than peers.
  • At the upper price band of Rs 178, offer is made at a PE of 23.5 times its FY 2019 earning. Finolex Industries trades at 18.5 times its FY 2019 earnings. On the other hand strong players like Astral Poly Technik is trading at PE of 70x.
  • GMP for Prince Pipes IPO has been ruling low at 10-15 Rs. firm and Rs. 500 subject to application.
  • Prince Pipes IPO size being small, the IPO should sail through easily.
  • The Industry prospects are good but promoters track record does not look very inspiring and the Prince Pipes IPO seems to be priced fully. I may skip Prince Pipes IPO and consider it only if there is a strong demand form QIBs for the IPO.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2)  Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors.  I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or  leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.