The initial public offering (IPO) of Raipur-based Sambhv Steel Tubes Ltd, a manufacturer of electric resistance welded (ERW) steel pipes and structural tubes, opened today, June 25, 2025, with the aim of raising ₹540 crore. The IPO will remain open for subscription until June 27, 2025. The price band for the IPO has been fixed at ₹77 to ₹82 per share.
Issue Details and Objectives
The IPO comprises a fresh issue of shares worth ₹440 crore and an offer for sale (OFS) of ₹100 crore. Investors can apply in lots of 182 shares, which translates to a minimum investment of ₹14,924 at the upper end of the price band. The company intends to utilize the proceeds from the fresh issue primarily to repay borrowings, with up to ₹390 crore allocated for this purpose, and for general corporate needs. The listing of the shares on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) is scheduled for July 2, 2025.
Grey Market Premium (GMP)
Ahead of the IPO opening, the Grey Market Premium (GMP) for Sambhv Steel Tubes was around ₹5, indicating a premium of approximately 6% over the issue price. This suggests that there is positive sentiment and anticipation in the market regarding the IPO.
Subscription Status
On the first day of the IPO, the subscription status was as follows: By 11:09:45 AM (Day 1) the IPO was subscribed 0.07 times overall. The retail category was subscribed 0.16 times, while the Qualified Institutional Buyers (QIB) category was subscribed 0.00 times, and the Non-Institutional Investors (NII) category was subscribed 0.07 times.
Company Overview and Financial Performance
Sambhv Steel Tubes is a backward-integrated manufacturer of ERW steel pipes and structural tubes. Since commencing operations in 2018, the company has integrated vertically, manufacturing sponge iron, blooms, slabs, and coils in-house. This integration provides insulation against input cost fluctuations and ensures supply-chain reliability. As of March 31, 2024 and March 31, 2025, the company’s total production capacity for high-quality steel products was 1,122,400 MTPA and 1,698,000 MTPA, respectively. The company has a widespread distribution network across 15 states and one union territory in India.
In FY24, Sambhv Steel reported a revenue of ₹1,285.76 crore, reflecting a 37% year-on-year increase. The Profit After Tax (PAT) stood at ₹82.44 crore, with EBITDA margins at 12.40%. The company's net worth doubled from ₹210.4 crore in FY23 to ₹438.28 crore in FY24. However, borrowings also increased significantly to ₹619.14 crore, which the IPO aims to address.
Valuation and Peer Comparison
At the upper end of the price band, Sambhv Steel Tubes is valued at a P/E of 21.64x based on FY24 earnings and 36.39x based on annualized 9MFY25 earnings, compared to an industry average of 27.14x. While the valuation may seem slightly premium, analysts believe it is justified, considering the company's forward integration, expanding product mix, and access to raw materials. SBICAP Securities has assessed the firm at an annualized EV/EBITDA ratio of 18.2x and a P/E ratio of 44.5x for 9MFY25, calculated based on the maximum price range and post-issue capitalization.
Brokerage Recommendations and Market Outlook
Brokerages are largely positive on the IPO, citing Sambhv's strong fundamentals, integration advantages, and scalability in a growing sector. BP Wealth has issued a 'Subscribe' rating, highlighting Sambhv's cost-efficient, single-location integrated facility and rising market share. Ventura Securities also recommends subscribing, noting the company's robust distributor-dealer network and its expansion into stainless steel products, which could boost future margins.
Key Strengths and Risks
Sambhv Steel Tubes has several strengths, including its backward integration, which mitigates input cost volatility, and its expanding product portfolio, including stainless steel products. The company's financial performance has shown consistent growth in revenue and profitability. However, investors should be mindful of risks, including high dependence on the ERW pipe segment and volatility in raw material prices. The company also carries a high debt burden.
Tentative IPO Dates
Anchor Investors
Ahead of the opening of the issue, Sambhv Steel raised ₹161.25 crore from 19 anchor investors at the upper price band of ₹82 per equity share.
Conclusion
Sambhv Steel Tubes' IPO presents an opportunity to invest in a growing steel pipe manufacturer with strong fundamentals and a strategic focus on backward integration and product diversification. While the valuation is slightly premium, the company's growth potential and positive industry outlook make it an attractive investment. Investors should consider their risk appetite and investment horizon before subscribing to the IPO.
