Sambhv Steel Tubes IPO: Check IPO Date, Lot Size, Price & Details

Introduction:

It is one of the key manufacturers of electric resistance welded (“ERW”) steel pipes and structural tubes (hollow section) in India in terms of installed capacity as of March 31, 2024. Its backward integration processes allow it to manufacture a range of finished products including ERW black pipes and tubes (hollow section), pre-galvanized (GP) pipes, Cold Rolled Full Hard (“CRFH”) Pipes and galvanized iron (“GI”) pipes and steel door frames, using intermediate products such as sponge iron, blooms/slabs and hot rolled (“HR”) coil, cold rolled (“CR”) coil (mild steel) and GP coils which are manufactured in-house. According to the CRISIL Report, it is one of the two players in India manufacturing ERW steel pipes and tubes (along with hollow section pipes and tubes) using narrow-width HR coil, as of December 31, 2024.

Its products are rust resistant and tailored to meet specific market requirements, ensuring wide application across multiple sectors including housing and infrastructure, water transportation, agriculture, automobile, telecommunications, oil and 264 gas, engineering, solar energy, fire-fighting systems, and for support structures of conveyors. It has a wide distribution network in India which extends across 15 states and one union territory as of December 31, 2024. Its focus on innovation and integrated manufacturing has resulted in successful launch of customized value added products and increased its gross margins from 24.35% in Fiscal 2022 to 25.66% in Fiscal 2023 and 28.43% in Fiscal 2024.In Fiscal 2025, it expanded its product portfolio to include additional value added products such as GP coils, pre-galvanized (GP) pipes, cold rolled full hard (“CRFH”) pipes, SS HRAP coils and SS cold rolled (“CR”) coils.

IPO Details:

Objectives of Issue:

• Pre-payment or scheduled re-payment of a portion of certain outstanding borrowings availed by the Company;
• General corporate purposes.

Key Strengths:

• Integrated Manufacturing Competencies- The company’s fully integrated manufacturing operations span the entire value chain, encompassing the production of intermediate products such as sponge iron, mild steel blooms/slabs, HR coils, GP coils, and CR coils — all of which are primarily consumed captively to manufacture its final products.Over the years, the company has strategically pursued forward integration initiatives, enabling it to manufacture value-added products utilizing in-house raw materials. This approach has yielded significant cost efficiencies and competitive advantages.In Fiscal 2020, the company commenced the production of blooms/slabs using sponge iron, with a portion sourced internally. By Fiscal 2022, it had begun manufacturing HR coils utilizing blooms produced in-house. In Fiscal 2023, it successfully developed the capability to produce ERW black pipes using captive narrow-width HR coils. Building on this, in Fiscal 2024 it introduced GI pipes into its portfolio through value addition to its ERW black pipes.In Fiscal 2025, the company further expanded its offerings by producing galvanized GP coils and pre-galvanized (GP) pipes. It also initiated the manufacture of stainless-steel HRAP and CR coils by captively utilizing stainless steel blooms/slabs and HR coils.This backward integration strategy enhances operational efficiency, reduces product costs, ensures raw material availability, and enables strict quality control — all of which bolster the company’s competitive edge. Its highly integrated setup also shortens delivery timelines, enhances customer service, supports higher operating margins, and empowers the company to produce value-added products with greater consistency.
• Strategically located manufacturing plants resulting in operational efficiencies - Its manufacturing facilities are strategically situated in close proximity to key raw material suppliers, optimizing logistics and ensuring a stable, efficient supply chain. By leveraging Chhattisgarh’s abundant natural resources — particularly coal and iron ore — it can efficiently produce sponge iron, a vital input for its steel products and a core element of its value chain.This geographic advantage also enables easy access to heavy transport vehicles, facilitating seamless distribution of its finished products across India. In addition to ensuring a steady and cost-effective supply of raw materials, this strategic location minimizes logistical complexity for outbound shipments, driving greater operational efficiency. Ultimately, its locational strength supports timely deliveries and enhances its ability to provide superior service to its valued customers.
• Extensive Distribution Network – As of December 31, 2024, it has 37 distinct distributors with two distributors distributing through six branches in 15 states and one union territory taking the total distributor network to 43. These distributors in turn distribute its finished products through over 700 dealers in India as of December 31, 2024. It believes that its distribution network provides it with a competitive advantage over other players in the ERW steel pipes and structural tubes sector. Its distribution network and its marketing initiatives has resulted in effective outreach of its products to a wide network of retailers and fabricators. It increasingly moved towards a distribution model for sale of its products. It has a wide-spread presence in the Indian states of Chhattisgarh, Maharashtra, Gujarat, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana.

Risks:

• Concentrated Product Sales- The company’s revenue is primarily derived from the sale of its key products, including ERW black pipes and tubes (hollow sections) and galvanized iron (GI) pipes. Any substantial decline in demand for these products, a shift by customers to alternative suppliers, the emergence of superior substitutes, or significant technological advancements in the production of these products could materially and adversely impact its business, financial performance, profitability, margins, cash flows, and overall financial position.
• Extremely Concentrated Facility - As of the date of this Red Herring Prospectus, I it has two operational manufacturing facilities, located in Sarora (Tilda), Raipur, Chhattisgarh and in Kuthrel, Raipur, Chhattisgarh. Further, it is planning to commission a greenfield facility in Village Kesda, District Baloda Bazar Bhatapara, Chhattisgarh for which approximately 395,378 square meters of land has been acquired by its subsidiary, Sambhv Tubes Private Limited. its existing and proposed manufacturing facilities are located in close proximity to each other. Its Registered and Corporate Office is also located in Chhattisgarh. The concentration of all of its operations in Chhattisgarh heightens its exposure to adverse developments related to regulation, as well as political or economic, demographic and other changes in Chhattisgarh as well as the occurrence of natural and man-made disasters in Chhattisgarh, which may adversely affect business, financial condition and results of operations.
• Conflict of Interest- Certain Promoters or Directors currently hold, or have previously held, interests in entities that operate in businesses similar to the Company’s, or whose constitutional documents permit them to do so. There can be no assurance that these Promoters or Directors will not offer competitive services or otherwise compete in existing or future business segments of the Company.In the event of a conflict of interest, these Promoters or Directors may take decisions regarding the Company’s operations, financial structure, or commercial transactions that may not align with the best interests of the Company and its shareholders. Furthermore, such decisions could provide competitive advantages to other parties at the Company’s expense.Any such conflicts could materially and adversely impact the Company’s business, results of operations, profitability, margins, cash flows, and overall financial condition.

Financial Snapshot:

KPI comparison with Industry Peers

Conclusion

The Indian steel pipes market is projected to grow at a CAGR of 8–9% over the next five years, driven by increasing demand across various industries, particularly irrigation, water supply, and sanitation. Furthermore, the adoption of lighter tabular tubes in place of conventional steel is expected to gain momentum, supported by various government initiatives and infrastructure projects.

The company is well-positioned to capitalize on this growth, leveraging its recent capital investments and fully integrated manufacturing operations to achieve industry-leading margins. On most key performance indicators, its financials have outperformed those of its peers. Although its debt-to-equity ratio is elevated relative to the industry, the anticipated repayment of borrowings from the IPO proceeds is expected to improve its leverage profile.

In terms of valuation, the company is attractively priced at a P/E of 21, compared to the industry average of approximately 32. Considering its strong fundamentals, competitive margins, reasonable valuation, and the promising industry outlook, the company appears to be a compelling long-term investment opportunity.