IPO will list on 4 Jun'25
Scoda Tubes Ltd
Minimum Investment
₹ 14,000 / 100 shares
Grey market premium
₹ 18 (13% premium)
Our Verdict:
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- Scoda Tubes Ltd (STL) is a prominent player in the stainless-steel pipes segment, with over a decade of operational experience. The company has demonstrated robust financial growth in recent years, reflected in both revenue and earnings.
- From a valuation perspective, the IPO appears reasonably priced with a price-to-earnings (P/E) ratio of 30x based on FY24 earnings. The grey market premium (GMP) for the IPO further indicates a positive listing on the stock exchanges.
- STL is embarking on a significant capex plan to nearly double its seamless pipe capacity and increase welded pipe capacity by ~13 times by March 2026. The medium-term outlook remains stable, with performance likely hinging on improved cash flow management and sustained demand from the infrastructure sector.
- Although debt levels warrant caution (detailed below), STL’s solid financial performance, diversified product range, fair valuation and stable outlook make it a suitable investment opportunity for long-term investors.
About the company
Founded in
10 Nov'08
Managing director
Jagrutkumar Patel
- STL is a stainless steel tubes and pipes manufacturer with over 14 years of industry experience. Its product portfolio is broadly divided into two categories: (i) seamless tubes and pipes, and (ii) welded tubes and pipes.
- The company operates a strategically located manufacturing plant on the Ahmedabad-Mehsana Highway in Gujarat. As of December 31, 2024, the facility has an installed capacity of 20,000 MT per annum for mother hollow, 10,068 MT per annum for seamless products and 1,020 MT per annum for welded products.
STRENGTHS
- Robust Financial Growth: From FY22 to FY24, STL delivered a strong CAGR of 44% in operational revenue, 143% in EBITDA and 234% in net profit.
- Solid Return Metrics: STL demonstrates strong operational efficiency with impressive return metrics— Return on Equity (RoE) at 28.77% and Return on Capital Employed (RoCE) at 15.92% in FY24.
- Expanding Profit Margins: Profitability has steadily improved, with EBITDA margins increasing from 5.15% in FY22 to 14.70% in FY24 and net profit margins rising from 0.84% to 4.58%, reaching 6.9% by December 2024.
RISK FACTORS
- Client Concentration: As of December 31, 2024, approximately 58% of STL’s revenue is derived from its top 10 customers. A decline in business from these key customers could adversely affect its operations and results.
- Leverage and Debt: As of March 31, 2024, the debt-to-equity ratio stood at 3.19, indicating significant reliance on borrowings. Elevated debt levels may lead to higher finance costs and pressure cash flows. Additionally, increases in interest rates could further raise borrowing expenses.
- Employee Retention: STL is experiencing a high attrition rate of nearly 20% as of December 31, 2024, which poses challenges in maintaining workforce stability and operational continuity.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 220 crore
Fresh Issue
₹ 220 crore
OFS
₹ -
Price range
₹ 130 - 140
Lot size
100 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for:
- Enhancing the production capacity of seamless and welded tubes and pipes;
- Funding a portion of the incremental working capital requirements of the company; and
- General corporate purposes.
Dates
Bidding open
28 May'25
Bidding close
30 May'25
Allotment date
2 Jun'25
Refund date
3 Jun'25
Listing
4 Jun'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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