Sambhv Steel Tubes IPO opens today: Should you subscribe?
Raipur-based
Sambhv Steel Tubes Ltd
, a backward-integrated manufacturer of ERW steel pipes and structural tubes, has opened its Rs 540 crore IPO for subscription today, June 25. The offer will close on June 27, with a price band of Rs 77 to Rs 82 per share.
Investors can apply in lots of 182 shares, translating to a minimum investment of Rs 14,924 at the upper band. Ahead of the issue opening, the GMP is around Rs 5, which is 6% premium over the issue price.
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The IPO comprises a fresh issue of shares worth Rs 440 crore and an offer for sale (OFS) of Rs 100 crore. The proceeds will be used mainly to repay borrowings (up to Rs 390 crore) and for general corporate purposes. The listing is scheduled for July 2, on both the NSE and BSE.
Should you subscribe?
Brokerages are largely positive on the issue, citing Sambhv's strong fundamentals, integration advantages, and scalability in a growing sector.
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BP Wealth has issued a 'Subscribe' rating, highlighting 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.
Sambhv's product portfolio includes black pipes, hollow sections, CRFH pipes, Corten steel pipes, GP pipes, GI pipes, and more.
Since commencing operations in 2018, the company has integrated vertically—manufacturing sponge iron, blooms, slabs, and coils in-house. This structure offers insulation against input cost fluctuations and ensures supply-chain reliability.
In FY24, Sambhv reported a revenue of Rs 1,285.76 crore, up 37% YoY. PAT stood at Rs 82.44 crore, with EBITDA margins at 12.40%. Net worth doubled from Rs 210.4 crore in FY23 to Rs 438.28 crore in FY24, while borrowings also rose significantly to Rs 619.14 crore, a factor the IPO aims to correct.
At the upper end of the price band, Sambhv is valued at a P/E of 21.64x (FY24) and 36.39x (annualised 9MFY25), compared to an industry average of 27.14x. While marginally premium, analysts believe these valuations are justified given the company's forward integration, expanding product mix, and access to raw materials.
(
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: 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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