Sambhv Steel Tubes IPO: GMP stable at 11%, issue witnesses oversubscription. Check details
IPO
) of Raipur-based Sambhv Steel Tubes Ltd, a backward-integrated producer of ERW steel pipes and structural tubes, which opened for
subscription
on Wednesday, is trading at a
grey market premium
(
GMP
) of Rs 9–10, indicating an 11% premium over the issue price.
At the end of the second day of bidding, the issue saw an overall subscription of 1.76 times, with non-institutional investors (NIIs) taking the lead, subscribing to the issue by 3.12 times, followed by the retail investors, who subscribed to the issue by 1.84 times.
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The qualified institutional buyers (QIBs) subscribed to the issue by 61%.
Investors can bid for a minimum of 182 shares, translating to a minimum investment of Rs 14,924 at the upper end of the price band.
The IPO comprises a fresh issue of shares worth Rs 440 crore and an offer for sale (OFS) of Rs 100 crore. The company plans to utilise the proceeds primarily to repay borrowings up to Rs 390 crore and for general corporate purposes. The shares are expected to be listed on both the NSE and BSE on July 2.
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What brokerages say about Sambhv Steel Tubes IPO?
Goejit Investments- Subscribe
At the upper price band of Rs 82, SSTL is valued at a P/E ratio of 44.5x (FY25E annualised), which appears reasonably priced relative to its peers.SSTL is strategically positioned to capitalize on India's
infrastructure
boom, driven by initiatives such as the Jal Jeevan Mission and Amrit Bharat scheme.
As a backward-integrated player with consistent financial growth, efficient strategic sourcing, and ongoing expansion plans, the company is well-poised for long-term value creation—supporting a 'Subscribe' recommendation for investors.
BP Wealth- Subscribe
BP wealth highlights Sambhv's cost-efficient, single-location integrated facility and rising market share. Ventura Securities too recommends 'Subscribe', noting the company's robust distributor-dealer network spanning 15 states and one union territory, and its expansion into stainless steel products, which could push future margins higher.
Choice Broking- Subscribe for long term
At a higher price band, the company is demanding a
valuation
of a P/E of 29.3x (based on FY24 EPS of Rs. 2.8) and EV/Sales of 2.4x; this valuation seems to be fully priced compared to its peer average. Annualizing 9MFY25 earnings (EPS of Rs 1.8), the implied P/E rises to 44.5x, reflecting a temporary decline in profitability due to ongoing facility expansions.
Backed by fully integrated operations and in-house manufacturing capabilities, the company is well-positioned to capitalize on this sectoral growth. While there may be short-term pressure on margins, the company's ongoing expansion and favorable industry dynamics point to strong long-term growth potential.
(
Disclaimer
: 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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