Scoda Tubes IPO opens for subscription: Should you invest?
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The initial public offering (IPO) of Scoda Tubes will open for subscription on May 28 and will close on May 30. The stainless-steel tubes and pipes manufacturer plans to raise Rs 220 crore entirely through a fresh issue of shares, priced in the range of Rs 130–140 per share.Scoda Tubes is offering between 1.57 crore and 1.69 crore shares and will be listed on both the NSE and BSE. Retail investors can bid for a minimum of one lot consisting of 100 shares, amounting to Rs 14,000 at the upper band. The allotment is expected to be finalized by June 2, and the stock is likely to debut on the exchanges on June 4.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.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 company, incorporated in 2008, specializes in manufacturing stainless-steel seamless and welded tubes, which are supplied to key sectors including oil & gas, chemicals, power, railways, and pharmaceuticals.It operates out of Mehsana, Gujarat, with backward integration through a hot piercing mill, and has a growing export presence across 11 countries. In the first nine months of FY25, export revenue accounted for over 28% of total revenue.Financially, the company has shown solid growth. Revenue jumped from Rs 194 crore in FY22 to Rs 400 crore in FY24. Profit after tax rose from Rs 1.63 crore in FY22 to Rs 18.3 crore in FY24. The company's EBITDA margin improved from 5.15% in FY22 to 14.7% in FY24, and the return on equity (RoE) stood at 28.77% for the same period.However, Scoda's cash flow efficiency has been a concern. Despite growing revenues and profits, cash generated from operations stood at just Rs 2.26 crore in FY24.Additionally, the company is heavily reliant on select stockists for both domestic and international sales, which poses a concentration risk. It also plans significant capacity expansion for welded pipes despite currently low utilization.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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