Unveiling Sambhv Steel Tubes IPO: A Comprehensive Investment Guide
The Indian stock market continues to offer exciting avenues for investors, with Initial Public Offerings (IPOs) often grabbing the spotlight. One such noteworthy event on the horizon is the public offering by Sambhv Steel Tubes Limited. As a prominent player in the manufacturing of electric resistance welded (ERW) steel pipes and structural tubes, this IPO presents an opportunity to gain exposure to the robust and growing steel sector. Let’s delve into the details of Sambhv Steel Tubes and what its IPO brings to the table for potential investors.
Sambhv Steel Tubes: A Glimpse into the Company's Core
Established in 2017, Sambhv Steel Tubes Limited has rapidly carved a niche for itself in the Indian steel industry. Specializing in ERW steel pipes and structural tubes, the company operates a strategically located manufacturing facility in Sarora, Raipur, Chhattisgarh. This region, abundant in mineral resources, provides a distinct advantage for sourcing raw materials.
- Backward Integration: A key competitive edge, Sambhv Steel Tubes boasts India's only single-location backward integrated facility. This means they manage their supply chain from sponge iron production, which is crucial for crude steel manufacturing, right through to finished pipes and tubes.
- Strategic Sourcing: The company procures iron ore from a "Navratna" public sector undertaking and coal from a "Maharatna" PSU, ensuring a stable and quality supply chain.
- Diverse Product Portfolio: Beyond ERW pipes and tubes, their offerings include sponge iron, blooms/slabs (mild and stainless steel), and narrow-width HR coils. They also produce GI pipes for various consumers and government projects.
- Extensive Reach: As of late 2024, their wide distribution network spans across 15 states and one union territory in India, with strong presence in major states like Chhattisgarh, Maharashtra, and Uttar Pradesh.
Decoding the Sambhv Steel Tubes IPO Offering
The upcoming IPO is structured to raise capital for the company's strategic growth initiatives. Here’s a quick overview of the key details:
| Particulars | Details |
|---|---|
| IPO Type | Mainboard Book Building Issue |
| Issue Price Band | ₹77 to ₹82 per share |
| Face Value | ₹10 per share |
| Total Issue Size | 6,58,53,657 shares (aggregating up to ₹540.00 Cr) |
| Fresh Issue | 5,36,58,536 shares (aggregating up to ₹440.00 Cr) |
| Offer for Sale (OFS) | 1,21,95,121 shares (aggregating up to ₹100.00 Cr) |
| Listing At | BSE, NSE |
Navigating the IPO Journey: A Tentative Timeline
For investors, understanding the IPO timeline is crucial to plan their applications. Here is the tentative schedule for Sambhv Steel Tubes IPO:
1
IPO Open Date
Wed, June 25, 2025
2
IPO Close Date
Fri, June 27, 2025
3
Tentative Allotment
Mon, June 30, 2025
4
Credit of Shares / Refunds
Tue, July 1, 2025
5
Tentative Listing Date
Wed, July 2, 2025
*Cut-off time for UPI mandate confirmation: 5 PM on June 27, 2025.
Sambhv Steel Tubes' Financial Performance Insights
A look at the company's financials provides essential insights into its past performance and growth trajectory.
| Period Ended | Assets (₹ Crore) | Revenue (₹ Crore) | Profit After Tax (₹ Crore) | EBITDA (₹ Crore) | Net Worth (₹ Crore) | Total Borrowing (₹ Crore) |
|---|---|---|---|---|---|---|
| 31 Dec 2024 | 1,411.82 | 1,018.81 | 40.69 | 106.37 | 478.46 | 619.15 |
| 31 Mar 2024 | 940.13 | 1,289.38 | 82.44 | 159.87 | 438.28 | 346.88 |
| 31 Mar 2023 | 552.14 | 939.00 | 60.38 | 117.30 | 210.40 | 282.77 |
| 31 Mar 2022 | 458.51 | 820.75 | 72.11 | 124.52 | 149.30 | 241.29 |
The company has demonstrated consistent growth in its asset base and net worth over the past few years, indicating expanding operations and financial strengthening. While revenue and profit figures have shown some fluctuations, the overall trend reflects a resilient business model in a dynamic industry.
Evaluating Investment Potential: Key Performance Metrics
To assess the value proposition of this IPO, examining key performance indicators (KPIs) is essential. As of March 31, 2024, Sambhv Steel Tubes' market capitalization stands at ₹2416.22 Cr.
| Key Performance Indicator | Value |
|---|---|
| Return on Equity (ROE) | 25.42% |
| Return on Capital Employed (ROCE) | 17.66% |
| Debt/Equity Ratio | 0.80 |
| Return on Net Worth (RoNW) | 25.42% |
| Profit After Tax Margin | 6.41% |
| EBITDA Margin | 12.43% |
| Price to Book Value | 4.51 |
Earnings and Valuation at a Glance:
| Metric | Pre-IPO | Post-IPO |
|---|---|---|
| EPS (Rs.) | 3.42 | 1.84 |
| P/E (x) | 23.97 | 44.54 |
*Pre-IPO EPS is based on financials up to March 31, 2024. Post-IPO EPS is calculated based on annualized financials up to December 31, 2024, reflecting the increased shareholding post-issue.
The post-IPO P/E ratio appears on the higher side, suggesting that the issue might be fully priced based on its recent annualized earnings. Investors considering this IPO for the long term should evaluate these metrics against industry peers and future growth prospects.
Strategic Allocation: Understanding IPO Reservation
The IPO shares are allocated across different investor categories, ensuring broad participation:
- Qualified Institutional Buyers (QIBs): Not more than 50% of the Net Offer.
- Retail Individual Investors (RIIs): Not less than 35% of the Net Offer.
- Non-Institutional Investors (NIIs): Not less than 15% of the Net Offer.
- Employee Reservation: Employees may receive a discount on bids up to ₹2 Lakhs in certain cases.
Bidding Categories and Limits:
| Application Category | Maximum Bidding Limits | Bidding at Cut-off Price Allowed |
|---|---|---|
| Retail Individual Investor (RII) | Up to ₹2 Lakhs | Yes |
| Small NII (sNII) | ₹2 Lakhs to ₹10 Lakhs | No |
| Big NII (bNII) | Above ₹10 Lakhs | No |
| Employee | Up to ₹2 Lakhs | Yes |
| Employee + RII/NII | As per respective category limits | Yes for Employee and RII/NII portion |
Investing in Sambhv Steel Tubes: Lot Size Dynamics
Investors interested in the IPO must bid for a minimum number of shares, known as the lot size, and in multiples thereof. The minimum and maximum investment amounts for different investor categories are outlined below:
| Application Category | Lots | Shares | Amount (at Cut-off Price ₹82) |
|---|---|---|---|
| Retail (Min) | 1 | 182 | ₹14,924 |
| Retail (Max) | 13 | 2,366 | ₹1,94,012 |
| Small HNI (Min) | 14 | 2,548 | ₹2,08,936 |
| Small HNI (Max) | 67 | 12,194 | ₹9,99,908 |
| Big HNI (Min) | 68 | 12,376 | ₹10,14,832 |
Behind the Vision: The Promoters of Sambhv Steel Tubes
The company's leadership plays a crucial role in its trajectory. Sambhv Steel Tubes is promoted by:
- Brijlal Goyal
- Suresh Kumar Goyal
- Vikas Kumar Goyal
- Sheetal Goyal
- Shashank Goyal
- Rohit Goyal
Collectively, the promoters held 71.9% of the shares prior to the IPO, demonstrating a significant stake and confidence in the company's future. This strong promoter holding often instills confidence in investors, indicating aligned interests.
Purpose of the Public Offering: IPO Objectives
The funds raised through this IPO are earmarked for specific objectives to support the company's growth and financial stability:
- Debt Repayment: A substantial portion, approximately ₹390.00 crores, is intended for the pre-payment or scheduled re-payment of existing borrowings. This move is expected to strengthen the company's balance sheet by reducing its debt burden.
- General Corporate Purposes: The remaining funds will be utilized for various general corporate needs, which could include working capital requirements, operational expenses, and future expansion initiatives.
Strategic Overview: Strengths, Weaknesses, Opportunities, Threats (SWOT)
A comprehensive analysis considers various internal and external factors influencing the company's prospects.
Strengths
- Unique single-location backward integrated manufacturing facility.
- Strategic plant location ensuring operational efficiencies and cost benefits.
- Strong capabilities in process innovation for value-added products.
- Extensive and well-established distribution network across India.
- Well-positioned to capitalize on the increasing demand for quality steel products.
- Experienced promoters and management with deep industry knowledge.
- Consistent track record of healthy financial performance.
Weaknesses
- Fluctuations in raw material prices (iron ore, coal) can impact profitability.
- Intense competition from both organized and unorganized players in the steel sector.
- Reliance on a limited number of major customers or specific market segments.
- Dependence on the overall health and growth of the construction and infrastructure sectors.
Opportunities
- Government's focus on infrastructure development (e.g., roads, housing) driving steel demand.
- "Make in India" initiatives encouraging domestic manufacturing and consumption.
- Increasing demand for specialized and high-quality ERW pipes and tubes.
- Potential for expanding product lines and exploring new geographic markets.
- Adoption of new technologies to enhance production efficiency and reduce costs.
Threats
- Economic slowdowns or recessions impacting demand for steel products.
- Volatile global commodity prices and currency fluctuations.
- Regulatory changes, environmental norms, and trade policies.
- Disruptions in supply chain or logistics.
- Emergence of substitute materials or new technologies.
Connecting with Sambhv Steel Tubes & Registrar Information
For any queries or official communication regarding the IPO, here are the relevant contact details:
Company Contact Details:
- Address: Office No. 501 to 511, Harshit Corporate, Amanaka, Raipur, Chhattisgarh, 492001
- Phone: +91 771 2222 360
- Email: cs@sambhv.com
IPO Registrar:
The registrar for the Sambhv Steel Tubes IPO is responsible for managing the application process, allotment, and refunds.
- Registrar Name: Kfin Technologies Limited
- Phone: 04067162222, 04079611000
- Email: sstl.ipo@kfintech.com
The Sambhv Steel Tubes IPO offers investors a chance to participate in a company with a strong foundation in the steel sector, characterized by backward integration and a wide distribution network. While the issue appears to be fully valued based on recent earnings, its strategic positioning and growth plans could offer potential for medium to long-term gains. As with any investment, it is advisable to conduct thorough due diligence, consider market conditions, and consult with a financial advisor before making your decision. Happy investing!