India’s steel sector continues to expand amidst rising infrastructure demand, urbanisation, and industrial growth. Sambhv Steel Tubes Limited, a Raipur-based manufacturer of Electric Resistance Welded (ERW) steel pipes and structural hollow sections, is looking to capitalise on this momentum through its upcoming Initial Public Offering (IPO). This article provides an in-depth look at Sambhv’s business model, financials, IPO details, and risks to help investors make an informed decision.
Table of Contents
- Understanding Sambhv Steel Tubes & Their IPO
- Sambhv’s Business Model: Steel Manufacturing & Distribution
- Market Presence: Location & Customer Segments
- Financial Performance Analysis: Sambhv’s Growth Metrics
- Sambhv IPO Details: Structure, Dates, and Allocation
- Investment Strengths: What Works in Sambhv’s Favour
- Potential Risks: What Investors Should Watch Out For
- Peer Comparison & Competitive Landscape: Sambhv Among Industry Peers
- Investment Conclusion: Is Sambhv IPO a Good Buy?
- FAQs
Sambhv Steel Tubes Limited was incorporated on 24 April 2017, in Chhattisgarh, India, initially as "Sambhv Sponge Power Private Limited." The company later transitioned to "Sambhv Steel Tubes Limited" on 22 February 2024, and subsequently became a public limited company on 5 July 2024.
The promoters and management team include Brijlal Goyal, Suresh Kumar Goyal, Vikas Kumar Goyal, Sheetal Goyal, Shashank Goyal, and Rohit Goyal. The registered office is located at Office No. 501 to 511, Harshit Corporate, Amanaka, Raipur 492 001, Chhattisgarh, India.
Sambhv Steel Tubes operates in the steel industry, specialising in the manufacture of steel tubes and pipes. The IPO aims to raise capital for debt repayment and capital expenditure, amongst other general corporate purposes.
Wrap-up: Sambhv Steel Tubes is entering the market with an IPO aimed at funding growth and reducing debt.
Sambhv Steel Tubes Limited is primarily engaged in the manufacture of Electric Resistance Welded (ERW) steel pipes and structural hollow sections. These products cater to a wide range of applications within the steel industry.
The company serves various customer segments, including distributors and direct consumers, with a notable presence in government projects. Its manufacturing facility is strategically located in Village - Sarora, Tehsil Tilda, Raipur, Chhattisgarh.
Sambhv Steel Tubes' business model focuses on efficient production and a broad distribution network to meet the demand for quality steel products across India.
Wrap-up: The company manufactures ERW steel pipes and tubes, serving diverse customers through its Raipur facility.
The company’s facility in Chhattisgarh offers a logistical advantage in Central India. Sambhv caters to customers across industries through a distributor network and direct clients, including infrastructure and construction firms.
Wrap-Up: Sambhv’s strategic location and customer mix support efficient operations and diversified demand.
Sambhv Steel Tubes Limited has demonstrated consistent financial growth over the last three fiscal years. The company's consolidated financial performance highlights a steady increase in both revenue and Profit After Tax (PAT).
Consolidated Financial Performance (All values in ₹ Crores)
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Fiscal Year
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Revenue
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PAT (Profit After Tax)
|
|
FY2022
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₹820.75
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₹72.11
|
|
FY2023
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₹939.00
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₹60.38
|
|
FY2024
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₹1,289.38
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₹82.44
|
Key Performance Indicators (KPIs) (as of 31 March 2024)
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KPI
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Value (Pre-IPO)
|
|
Earnings Per Share (EPS)
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₹3.79
|
|
Return on Net Worth (RoNW)
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25.42%
|
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Net Asset Value (NAV)
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₹18.19
|
|
Debt to Equity
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0.80
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Wrap-up: The company shows consistent revenue and profit growth, with healthy KPIs prior to the IPO.
The Sambhv Steel Tubes IPO is a combination of a new issue and an offer for sale, aiming to raise a total of ₹540.00 crores. The IPO is structured to allow both new capital infusion into the company and an opportunity for existing shareholders to divest a portion of their holdings.
IPO Details
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Share Allocation Structure:
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Investor Category
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Shares Offered
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Qualified Institutional Buyers (QIB) Shares Offered
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Not more than 50% of the Net Offer
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Retail Shares Offered
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Not less than 35% of the Net Offer
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|
Non-Institutional Investors (NII) Shares Offered
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Not less than 15% of the Net Offer
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Wrap-Up: Sambhv’s ₹540 crore IPO opens on 25 June with a ₹77–₹82 price range, offering shares across QIB, NII, and retail segments, and lists on 2 July.
Sambhv Steel Tubes Limited possesses several competitive advantages that position it favourably within the steel industry. These strengths contribute to its operational efficiency and market standing.
- Integrated Facility: The company operates the only single-location backward integrated facility in India, which enhances control over the production process and reduces reliance on external suppliers.
- Strategic Location: Its manufacturing plants are strategically located, leading to operational efficiencies and cost savings in logistics and raw material procurement.
- Process Innovation: Strong process innovation and execution capabilities enable the company to produce value-added products, catering to diverse market needs.
- Distribution Network: A widespread and well-connected distribution network across India ensures effective reach to key customer segments.
- Market Positioning: The company is well-positioned to capitalise on the growing demand for quality ERW steel pipes and tubes in India.
- Experienced Management: An experienced team of promoters and management with extensive knowledge of the steel industry guides the company's strategic direction.
- Healthy Financial Performance: A consistent track record of healthy financial performance underscores the company's operational and financial stability.
Wrap-up: Sambhv Steel Tubes benefits from an integrated facility, strategic location, strong distribution, and experienced management, contributing to its healthy financial performance.
Investing in an IPO, particularly in a cyclical industry like steel, involves inherent risks. Potential investors should carefully consider the following factors highlighted in the Red Herring Prospectus (RHP) of Sambhv Steel Tubes Limited.
- Industry-Specific Risks: The steel industry is susceptible to raw material price volatility (e.g., iron ore, coal), intense competition from both domestic and international players, and evolving regulatory changes.
- Operational Risks: Challenges related to maintaining optimal manufacturing capacity, dependencies on specific suppliers for raw materials, and ensuring consistent quality control throughout the production process pose operational risks.
- Financial Risks: The company's financial health can be affected by its debt levels, the efficiency of its working capital management, and its ability to maintain healthy profitability margins.
- Legal and Regulatory Risks: Compliance with a complex framework of environmental regulations, labour laws, and other statutory requirements in India can lead to legal and financial implications if not adhered to.
- Dependence on Promoters/Key Management: The continued success of the company relies significantly on the services and expertise of its key personnel and promoters. Their departure could impact operations.
- Litigation and Contingent Liabilities: The presence of ongoing or potential future legal proceedings and contingent liabilities could have an adverse effect on the company's financial condition and reputation.
- Valuation Risks: The IPO price may not accurately reflect the true market value of the shares, and there might be limited liquidity or no formal market for the Equity Shares after the IPO, especially for SME listings.
Wrap-up: Investors should be aware of market, industry, operational, financial, legal, and valuation risks, as well as dependence on key management.
To provide a comprehensive view of Sambhv Steel Tubes Limited within its industry, it is essential to compare its financial performance and market standing with similar listed peers. This comparison helps investors gauge the company's relative position and potential.
List of Similar Listed Peers:
- APL Apollo Tubes Ltd
- Hariom Pipes Industries Limited
- Hi-Tech Pipes Limited
- JTL Industries Limited
- Rama Steel Tubes
Industry Peer Snapshot (FY24)
Sambhv compares favourably in terms of RoNW and profitability within the mid-sized player group. While not as large as APL Apollo or JTL, its financial metrics suggest efficient operations and readiness for growth. The company’s debt profile and margins position it strongly for future competitiveness.
Wrap-Up: Sambhv shows strong RoNW and profitability among mid-sized peers, though it trails large players like APL Apollo.
Sambhv Steel Tubes IPO presents an opportunity for investors to engage with a growing player in the Indian steel tube and pipe sector. The company demonstrates a strong financial performance track record and strategic advantages, including an integrated manufacturing facility and an experienced management team.
However, potential investors must carefully weigh these strengths against the inherent risks associated with the steel industry and IPOs, such as market volatility, raw material price fluctuations, and competition. The use of IPO proceeds for debt repayment and capital expenditure indicates a clear growth strategy.
Ultimately, the decision to invest should be based on a thorough understanding of the company's fundamentals, the prevailing market conditions, and individual risk appetite. Consulting with a financial advisor is recommended for personalised investment guidance.
Wrap-up: Sambhv Steel Tubes IPO offers growth potential but requires careful consideration of industry-specific and market risks.
Q1: What is the primary business of Sambhv Steel Tubes Limited?
Sambhv Steel Tubes Limited manufactures Electric Resistance Welded (ERW) steel pipes and structural hollow sections for various industrial applications.
Q2: What are the key dates for the Sambhv Steel Tubes IPO?
The IPO opens on 25 June 2025 and closes on 27 June 2025. Allotment is expected on 30 June 2025, with tentative listing on 2 July 2025.
Q3: How much capital is Sambhv Steel Tubes aiming to raise through this IPO?
The company aims to raise ₹540.00 crores through a combination of a new issue and an offer for sale.
Q4: What are the main purposes for which the IPO proceeds will be used?
The IPO proceeds will primarily be used for debt repayment and capital expenditure, along with general corporate purposes.
Q5: What are the key financial highlights of Sambhv Steel Tubes for FY24?
For FY24, the company reported a revenue of ₹1,023.46 crores and a PAT of ₹56.79 crores. Its RoNW was 18.23%, and EPS was ₹2.36.
Q6: Where will Sambhv Steel Tubes Limited be listed?
Sambhv Steel Tubes Limited is tentatively scheduled to be listed on both the BSE and NSE.