IPO closes on 27 Jun'25
Sambhv Steel Tubes Ltd
Minimum Investment
₹ 14,924 / 182 shares
Grey market premium
₹ 10 (12% premium)
Our Verdict:
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- Sambhv Steel Tubes Ltd (SSTL) has shown consistent growth in both top and bottom lines over the past three fiscal years. With its major expansion plans now operational, the company is well-positioned to generate higher revenues and profits in the years ahead.
- From a valuation perspective, the IPO is reasonably priced with a P/E ratio of 22x based on FY24 earnings. Additionally, the grey market premium (GMP) indicates a positive listing on the stock exchanges.
- While SSTL faces competition from other domestic steel pipe manufacturers, it differentiates itself with best-in-class gross and operating margins. This is largely driven by its fully backward-integrated operations. Unlike its peers, SSTL manufactures its own HR coils—a key raw material—along with producing sponge iron and bloom/slabs in-house, which further enhances its cost efficiency.
- Given the company's solid financial track record, favourable industry trends, backward integration and an expanding portfolio of value-added products, investors with a long-term horizon may consider subscribing to the IPO.
About the company
Founded in
24 Apr'17
Managing director
Vikas Goyal
- SSTL is a leading manufacturer of Electric Resistance Welded (ERW) steel pipes and structural tubes (hollow sections). It stands out as one of the few players in India using narrow-width HR coils (raw material) to produce customizable pipes and tubes, meeting specific customer requirements. Its ERW pipes and tubes are available in thicknesses ranging from 1 mm to 5 mm, serving industries such as housing, infrastructure, water transport, engineering and fire-fighting.
- As of March 31, 2025, SSTL boasts a total installed capacity of 16,98,000 MTPA for both intermediate and finished steel products. Its extensive distribution network includes 43 distributors and over 700 dealers across India (as of December 31, 2024).
STRENGTHS
- Steady Financial Growth: From FY22 to FY24, SSTL delivered a solid CAGR of 25% in operating revenue, 13% in EBITDA and 7% in net profit.
- Healthy Return Metrics: SSTL demonstrates strong operational efficiency with impressive return metrics— Return on Equity (RoE) at 25% and Return on Capital Employed (RoCE) at 18% in FY24.
- Profit Margins: SSTL posted an EBITDA margin of 12.43% and a net profit margin of 6.41% in FY24, surpassing six of its listed peers.
- Integrated Manufacturing Operations: SSTL’s fully integrated operations, which include the production of intermediate products like sponge iron, mild steel blooms/slabs, HR coils, etc, drive efficiencies. These products are primarily used in-house for the manufacture of final products, helping the company maintain high EBITDA margins compared to its peers.
RISK FACTORS
- Cash Flow Concerns: SSTL has experienced negative cash flow from operations in 9MFY25. Continued negative cash flows could jeopardize business continuity and financial stability.
- Increasing Competitive Pressure: With several peers planning significant capacity expansions, there is a risk of overcapacity in the industry, which could heighten pricing pressure and impact market share.
- Execution Risks: SSTL is executing major greenfield and brownfield expansion projects, which involve substantial capital expenditure and execution risks. Delays or cost overruns could adversely affect profitability and return ratios in the short term.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 540 crore
Fresh Issue
₹ 440 crore
OFS
₹ 100 crore
Price range
₹ 77 - 82
Lot size
182 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for:
- Pre-payment or re-payment of certain outstanding borrowings availed by the Company; and
- General corporate purposes.
Dates
Bidding open
25 Jun'25
Bidding close
27 Jun'25
Allotment date
30 Jun'25
Refund date
1 Jul'25
Listing
2 Jul'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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