Scoda Tubes IPO Review: Growth Potential & Risks Explained

Gujarat-based stainless steel tubes and pipes manufacturer, Scoda Tubes Limited, is set to make its public debut with a ₹220 crore Mainboard Initial Public Offering (IPO). This offering is structured entirely as a fresh issue, aiming to bolster the company's financial position and fund its ambitious growth initiatives.

Table of Contents

1. Scoda Tubes IPO 2025: Key Highlights and Offer Details
2. About Scoda Tubes: A Stainless Steel Specialist in India
3. Scoda Tubes IPO Objectives: Capacity Expansion and Working Capital
4. Scoda Tubes Business Performance Snapshot: A Growth Story
5. How Scoda Tubes Compares with Indian Stainless Steel Peers
6. Key Financial Metrics of Scoda Tubes Ahead of IPO Listing
7. Should You Consider Investing in Scoda Tubes IPO?
8. Final Verdict: Is Scoda Tubes IPO a Good Bet for Long-Term Investors?

Scoda Tubes IPO 2025: Key Highlights and Offer Details

Scoda Tubes Limited is launching its IPO with the following key details:

• Lot Size: 100 shares
• Minimum Investment (Retail): ₹13,000 (at lower price band)
• Maximum Retail Investment: ₹1,96,000 (14 lots, at upper price band)

Wrap-up: A concise three-day bidding window offering investors exposure to a growing stainless steel manufacturer with a focus on capacity expansion and working capital. The absence of an OFS signals strong promoter confidence in future growth.

About Scoda Tubes: A Stainless Steel Specialist in India

Incorporated on 10 November 2008, Scoda Tubes Limited operates from its registered office in Mehsana, Gujarat. The company specialises in manufacturing and exporting a diverse range of stainless steel tubes and pipes, including seamless and welded solutions, U-tubes, and precision instrumentation tubes, under its proprietary brand "Scoda Tubes Limited".

• Product Portfolio: Seamless and welded stainless steel solutions, standard pipes, tubes, specialised U-tubes, and precision instrumentation tubes.
• Key Industries Served: Oil & Gas, Chemicals, Fertilisers, Power generation, Pharmaceuticals, Automotive, Railways, and Transportation.
• Manufacturing Facility: A single, integrated facility in Rajpur, Kadi, Mehsana, Gujarat, strategically located near Mundra Port for logistical advantages.
• Backward Integration: Owns and operates a hot piercing mill (since May 2022) for producing mother hollows (20,000 MTPA capacity), a key raw material, enhancing cost control and quality.
• Global Footprint: Exported products to 16 countries in FY24 and 11 countries in 9MFY25, with export revenues consistently contributing 20.82% to 30.84% of total revenue.
• Quality Control: Dedicated 14-member quality team ensures stringent standards, resulting in low rejection rates (2.6% internally, 0.31% by customers in FY24).

Wrap-up: With a strong brand reputation, diversified product portfolio, backward integration, and a growing global presence, Scoda Tubes is a significant player in India's stainless steel tube and pipe sector.

Scoda Tubes IPO Objectives: Capacity Expansion and Working Capital

Scoda Tubes plans to channel the entire IPO proceeds of ₹220 crore into strategic investments aimed at fueling its growth.

• Capital Expenditure: ₹76.99 crore earmarked for expanding production capacity of seamless and welded tubes and pipes. This includes doubling seamless capacity to 20,068 MTPA and scaling welded capacity over 12-fold to 13,150 MTPA, alongside new quality inspection and heat treatment lines and automated warehouse operations.
• Working Capital: ₹110 crore allocated to fund a portion of the incremental working capital requirements.
• General Corporate Purposes: To support other operational and strategic needs.

Wrap-up: This IPO will significantly enhance Scoda Tubes' production capabilities and liquidity, positioning it for aggressive market capture and operational scaling in the growing stainless steel market.

Scoda Tubes Business Performance Snapshot: A Growth Story

Scoda Tubes has demonstrated a robust financial growth trajectory over the past few years, marked by impressive revenue and profitability surges.

• Revenue from Operations: Grew from ₹194.03 crore in FY22 to ₹399.86 crore in FY24, achieving a 3-year Compound Annual Growth Rate (CAGR) of 27.26%. For 9MFY25, revenue stood at ₹361.17 crore.
• Profit After Tax (PAT): Surged dramatically from ₹1.64 crore in FY22 to ₹18.30 crore in FY24, representing a staggering 3-year PAT CAGR of 123.64%. 9MFY25 PAT was ₹24.91 crore, already surpassing full FY24 PAT.
• EBITDA Margin (FY24): Expanded to 14.70% (from 5.15% in FY22), reaching 16.79% in 9MFY25.
• PAT Margin (FY24): Increased to 4.58% (from 0.85% in FY22), reaching 6.90% in 9MFY25.
• Debt Position: Total borrowings were ₹202.16 crore as of December 2024.
• Debt-to-Equity Ratio: Improved from 3.14 in FY22 to 1.41 as of December 2024.

Wrap-up: A strong growth story with significantly improving profitability and return ratios, though historically negative operating cash flows remain a key area for scrutiny.

Scoda Tubes and Its Peers

• P/E Ratio: Scoda Tubes' FY24 P/E of 30.43x appears reasonably priced when compared to some direct peers like Ratnamani Metals (31.93x) and Venus Pipes (30.77x).
• Debt-to-Equity: At 1.41 (Dec 2024), Scoda Tubes' Debt-to-Equity ratio remains considerably higher than the sector average of 0.67, indicating higher financial leverage.
• Scale: Scoda Tubes' market capitalisation of ₹838.73 crore and FY24 revenue of ₹399.86 crore are currently lower than the sector averages.

Wrap-up: Scoda Tubes' P/E ratio is competitive, but its higher debt and smaller scale compared to more mature peers require careful consideration. The company's high growth rate suggests it's actively gaining market share in a specialised niche.

Key Financial Metrics of Scoda Tubes Ahead of IPO Listing

Ahead of its market debut, Scoda Tubes’ financials reflect a business with impressive growth in revenue and profitability.

• Revenue from Operations: The company's revenue from operations was ₹194.03 crore in FY22, growing to ₹305.13 crore in FY23, and further to ₹399.86 crore in FY24. In the nine months ending December 2024 (9MFY25), it stood at ₹361.17 crore.
• Profit After Tax (PAT): PAT was ₹1.64 crore in FY22, increasing to ₹10.34 crore in FY23, and then to ₹18.30 crore in FY24. For 9MFY25, PAT reached ₹24.91 crore.
• EBITDA Margin: EBITDA margin was 5.15% in FY22, rising to 11.40% in FY23, 14.70% in FY24, and 16.79% in 9MFY25.
• PAT Margin: PAT margin was 0.85% in FY22, 3.39% in FY23, 4.58% in FY24, and 6.90% in 9MFY25.
• Debt-to-Equity Ratio: This ratio was 3.14 in FY22, 3.06 in FY23, 3.19 in FY24, and improved to 1.41 in 9MFY25.
• Return on Net Worth (RONW): RONW was 4.68% in FY22, 22.81% in FY23, 28.77% in FY24, and 17.36% in 9MFY25.
• Net Cash Flow (from Operations): The company reported negative net cash flows from operations of -₹0.14 crore in FY22, -₹0.24 crore in FY23, and -₹0.05 crore in FY24. Data for 9MFY25 was not available.

Note: 9MFY25 ROE and ROCE figures are for the nine-month period and would be higher if annualised.

Wrap-up: The company’s improving profitability and return ratios are strong indicators, but persistent negative cash flows from operations remain a point of concern regarding its internal funding capabilities.

Should You Consider Investing in Scoda Tubes IPO?

Reasons to Invest:

• Impressive Financial Growth: Robust revenue and PAT growth, significantly outperforming broader market growth.
• Strategic Capacity Expansion: IPO proceeds are directed towards crucial expansion plans in seamless and welded capacities, aligning with industry demand.
• Backward Integration: Ownership of hot piercing mill enhances cost control, quality, and supply chain reliability.
• Diversified Customer Base & Global Presence: Reduces reliance on any single sector or region.
• Positive Industry Outlook: Operating in a growing niche within the Indian stainless steel tubes market.
• "Fresh Issue" Structure: Signals management's strong confidence in future growth and commitment to reinvesting in the business.
• Potential Listing Gains: Current Grey Market Premium (GMP) of ₹22 suggests an estimated ~15.7% listing gain over the upper price band.

Risks to Watch:

• Customer Concentration: Top 3 customers accounted for 44% of 9MFY25 revenue, posing a significant business risk.
• Raw Material Price Volatility: High dependence on stainless steel prices can directly impact profitability.
• Historically Negative Cash Flows: Consistent negative operating cash flows raise concerns about liquidity and the company's ability to fund operations organically.
• High Debt-to-Equity Ratio: While improved, still considerably higher than the sector average, indicating elevated financial leverage.
• Capacity Utilisation Discrepancies: Very low utilisation in the welded segment (8.46% in 9MFY25), in contrast with aggressive expansion plans, introduces execution risk.
• Competition: Operates in a competitive market with larger, more established players.

Wrap-up: The IPO offers a promising opportunity for long-term investors betting on India's growing industrial and infrastructure sectors. However, careful consideration of operational and financial risks, particularly cash flow generation and debt management, is advised.

Want a quick update on Scoda Tubes IPO and GMP? Watch this video!

Final Verdict: Is Scoda Tubes IPO a Good Bet for Long-Term Investors?

Scoda Tubes’ IPO positions it well to capitalise on India's expanding industrial demand for stainless steel tubes. With a strong track record of growth, strategic backward integration, and a clear plan for capacity expansion, the company is poised for scalable growth. The "fresh issue" nature indicates management's conviction in the business's future.

While the company has demonstrated remarkable financial improvement, the persistent negative cash flows from operations and its relatively high debt-to-equity ratio are critical factors requiring ongoing monitoring. The success of its ambitious capacity expansion, especially in the underutilised welded segment, will be key to translating investments into sustainable profits and positive cash flows.

Scoda Tubes IPO: Frequently Asked Questions (FAQs)

Q1: What is the Scoda Tubes IPO about?

The Scoda Tubes IPO is a Mainboard Initial Public Offering by Scoda Tubes Limited, a Gujarat-based manufacturer and exporter of stainless steel tubes and pipes. The ₹220 crore IPO is an entirely fresh issue, aimed at funding the company's capacity expansion and working capital needs.

Q2: What are the important dates for the Scoda Tubes IPO?

 The Scoda Tubes IPO is scheduled to open for subscription on 28 May 2025, and will close on 30 May 2025. The shares are expected to list on BSE and NSE on 4 June 2025.

Q3: What is the price band and lot size for the Scoda Tubes IPO?

The price band for the Scoda Tubes IPO is set between ₹130 and ₹140 per equity share. Retail investors can apply for a minimum lot size of 100 shares, requiring a minimum investment of ₹13,000.

Q4: What are the main objectives of the Scoda Tubes IPO?

The primary objectives of the Scoda Tubes IPO are to fund the expansion of its seamless and welded tube production capacity (estimated ₹76.99 crore) and to meet its incremental working capital requirements (estimated ₹110 crore), along with general corporate purposes.

Q5: How has Scoda Tubes' financial performance been recently?

Scoda Tubes has shown strong financial growth, with revenue growing at a 27.26% CAGR and Profit After Tax (PAT) at an impressive 123.64% CAGR over the last three fiscal years. Its PAT for 9MFY25 was ₹24.91 crore, already surpassing the full FY24 PAT.

Q6: What are the key strengths of Scoda Tubes as an investment?

Key strengths include a diversified customer base across critical industries, consistent growth in export performance, robust quality control, backward integrated manufacturing (hot piercing mill), and a strategically located manufacturing facility enhancing operational efficiency.

Q7: What are the main risks associated with investing in Scoda Tubes IPO?

Significant risks include customer concentration (top 3 customers contributed 44% of 9MFY25 revenue), high vulnerability to raw material price volatility, historically negative net cash flows from operating activities, and current low utilisation in the welded capacity segment despite ambitious expansion plans.

Q8: What is the Grey Market Premium (GMP) for Scoda Tubes IPO?

The Grey Market Premium (GMP) for Scoda Tubes IPO was reported at ₹22, suggesting a potential listing gain of approximately 15.7% over the upper price band of ₹140.