Scoda Tubes IPO attracts strong demand, subscribed over 9x on Day 3 so far. Check details
Scoda Tubes IPO saw strong subscription, led by NIIs. Backed by robust financial growth, export potential, and backward integration, brokerages recommend a long-term "Subscribe." However, cash flow concerns and customer concentration risks remain. The Rs 220 crore issue closes on May 30, with listing expected on June 4.
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The initial public offering ( IPO ) of Scoda Tubes , which saw a smooth response on the first 2 days of the bidding process, has drawn robust interest on Day 3, with the issue subscribed 0.07 times in total so far.The strong response has been led by non-institutional investors (NIIs), who had subscribed 27.04 times by around 11:15 am. Retail investors followed with a 5.63 times subscription , while qualified institutional buyers (QIBs) took up the issue 1.8 times.In the unlisted market, Scoda Tubes shares are commanding a premium of Rs 19–21, translating to a GMP of 13.6%.Brokerage firm Canara Bank Securities has recommended a 'SUBSCRIBE' rating for long-term investors. It noted that the company's technical expertise, rising export share, asset-backed expansion, and sector tailwinds position it well for scalable growth. While the IPO is priced at a P/E of 30.43x and a P/B of 8.76x -- broadly in line with industry peers -- investors should be mindful of cash flow concerns and customer concentration risks.Analysts at Anand Rathi stated they believe that the company's key differentiator is its manufacturing process of its crucial raw material which enables backward integration , enabling Scoda Tubes to exercise greater control over production costs, reduce dependence on third-party suppliers, and improve overall operational efficiency.As the issue is fully priced, they gave a 'Subscribe for long term' rating for the issue.In summary, investors with a long-term view looking to tap into India's industrial and export manufacturing story may consider subscribing to Scoda Tubes IPO.The IPO opened for subscription on May 28 and will remain open until May 30. Allotment is expected to be finalized by June 2, with the listing scheduled for June 4 on both NSE and BSE.The company plans to raise Rs 220 crore via a 100% fresh issue, offering 1.57 crore to 1.69 crore equity shares within a price band of Rs 130 to Rs 140 per share.Established in 2008, Scoda Tubes manufactures stainless-steel seamless and welded tubes for critical industries including oil & gas, chemicals, power, railways, and pharmaceuticals. The company operates out of Mehsana, Gujarat, and boasts backward integration through a hot piercing mill.Scoda Tubes has also expanded internationally, with exports contributing over 28% to total revenue in the first nine months of FY25, spanning 11 countries.Financial SnapshotScoda Tubes has posted impressive growth over the past two years. Revenue rose sharply from Rs 194 crore in FY22 to Rs 400 crore in FY24, while profit after tax (PAT) jumped from Rs 1.63 crore to Rs 18.3 crore over the same period.Operationally, the company has strengthened its margins, with EBITDA margin climbing from 5.15% in FY22 to 14.7% in FY24, and return on equity (RoE) improving to 28.77%.However, despite this performance, the company's cash flow from operations in FY24 was modest at Rs 2.26 crore, highlighting concerns around cash flow efficiency even amid rising revenue and profits.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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