Sambhv Steel Tubes IPO opens tomorrow: 10 key things to know from RHP before you subscribe to ₹540 crore issue

Sambhv Steel Tubes IPO in focus: Sambhv Steel Tubes' initial public offering (IPO) is scheduled to kick off for subscription on Wednesday, June 25, and will remain open until Friday, June 27. The company aims to raise ₹540 crore through the offering, which is a combination of a fresh issue of 5.37 crore shares aggregating to ₹440 crore and an offer for sale of 1.22 crore shares aggregating to ₹100 crore.

The IPO price band is set at ₹77 to ₹82 per share. Of the total offering, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for Retail Investors.

Retail investors can apply for a minimum of 182 shares in one lot and can apply for up to 13 lots. At the upper end of the IPO price band ( ₹82), retail investors are required to make a minimum investment of ₹14,924 per lot.

Let us take a look at some of the key points mentioned in Sambhv Steel Tubes RHP:

1. Company Overview: Incorporated in 2018, the company is one of the key manufacturers of electric resistance welded (ERW) steel pipes and structural tubes (hollow sections) in India, based on installed capacity as of March 31, 2024. The company claims to be the only player in the country with a single-location, backward-integrated manufacturing facility for ERW steel pipes and tubes, with operations spanning the entire value chain.

2. Diversified End-Use Sectors: Its products cater to a wide range of sectors, including housing and infrastructure, water transportation, agriculture, automobiles, telecommunications, oil and gas, engineering, solar energy, fire-fighting systems, and support structures for conveyors.

3. Sourcing from Leading PSUs: The company sources its iron ore from a “Navratna” public sector undertaking (PSU) mining company and procures coal from a “Maharatna” PSU through one of its highest-producing subsidiaries. These coal mines, among Asia’s largest, are located approximately 250 kilometers from the company’s Sarora (Tilda) facility, offering logistical advantages and raw material security.

4. Production Capacity: As of March 31, 2024, and September 20, 2024, the company had a total installed capacity of 1,122,400 metric tons per annum (MTPA) and 1,540,000 MTPA, respectively, for producing high-quality intermediate and finished steel products.

5. Financial Performance: Its financial performance has shown significant growth over the past two fiscal years. Revenue from operations increased to ₹12,857.57 million in FY24 from ₹8,193.49 million in FY22, while restated profit rose to ₹824.39 million from ₹721.08 million during the same period. Total income climbed to ₹12,893.75 million in FY24 from ₹8,207.53 million in FY22.

The company’s total equity grew to ₹4,382.82 million as of March 31, 2024, from ₹1,492.97 million as of March 31, 2022, and total assets increased to ₹9,401.34 million from ₹4,585.09 million over the same timeframe.

6. Upcoming Expansion Plans: Currently, the company operates a single manufacturing facility located at Sarora (Tilda), Raipur, Chhattisgarh. It intends to commission a new manufacturing plant in Kuthrel within FY25 to further expand its capacity. Additionally, the company is planning to set up a greenfield manufacturing facility in Village Kesda, District Baloda Bazar-Bhatapara, Chhattisgarh, as part of its long-term expansion strategy.

7. Competitive Landscape: The company faces competition from both domestic and international players in the production of sponge iron, blooms/slabs, HR coils, ERW black pipes, GI pipes, and CR coils. Key competitors in the industry include APL Apollo Tubes, Hariom Pipe Industries, Hi-Tech Pipes, Rama Steel Tubes, Surya Roshni, and JTL Industries.

8. Key Risks: The company faces risks from potential increases in raw material costs or supply shortages, which could impact its profitability and financial health. Additionally, with revenue heavily concentrated in North and West India, any adverse regional developments or failure to expand into new markets may limit growth and increase exposure to localized risks.

9. Objectives of the Issue: The company proposes to utilize the net proceeds from the issue towards prepayment or scheduled repayment of a portion of certain outstanding borrowings and general corporate purposes.

10. Listing and Allotment Details: The allotment of shares for the Sambhv Steel Tubes IPO is expected to be finalized on Monday, June 30, 2025. Tentative listing on both the BSE and NSE is scheduled for Wednesday, July 02, 2025.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.