Scoda Tubes IPO: Check IPO Date, Lot Size, Price & Details

Introduction

The company is a stainless-steel tubes and pipes manufacturer based in India having over 14 years of experience.. Its products are broadly categorised into: (i) seamless tubes/pipes; and (ii) welded tubes and pipes, under five (5) product lines, namely, (i) stainless steel seamless pipes; (ii) stainless steel seamless tubes; (iii) stainless steel seamless “U” tubes; (iv) stainless steel instrumentation tubes; and (v) stainless steel welded tubes and “U” tubes. Its products are used by a diverse range of customers like engineering companies, EPC and industrial companies engaged in Oil and Gas, Chemicals, Fertilisers, Power, Pharmaceuticals, Automotive, Railways and Transportation sectors.As of December 31, 2024, its Manufacturing Facility has a total installed capacity of 20,000 MT per annum of mother hollow, 10,068 MT per annum of seamless products and 1,020 MT per annum of welded products. Further, it has a storage facility for the purposes of holding inventory of raw materials and finished products.It caters to both the domestic as well as the international markets.

IPO Details:

Objectives of Issue:

• Capital expenditure towards expanding production capacity of seamless and welded tubes and pipes
• Funding the part incremental working capital requirements of the Company
• General corporate purposes

Key Strengths:

• Strategic Location and Integrated Operations (Specifically Backward Integration): Scoda Tubes Limited's manufacturing facility is strategically located in Gujarat, providing advantageous access to key ports like Mundra (approximately 360 km away, important for exports) and an Inland Container Depot (23 km away). This proximity aids in reducing logistics costs and improving margins. Furthermore, the company has invested in backward integration by establishing its own hot piercing mill for producing mother hollow, a principal raw material for seamless products, with a capacity of 20,000 MT per annum. This capability allows the company to control production costs, reduce reliance on external suppliers, and provides flexibility to adapt its product portfolio based on market dynamics. This integrated approach at a strategically located facility enhances operational efficiency and cost competitiveness.
• Extensive Quality Control and Low Rejection Rates: The company places a high emphasis on quality control throughout its manufacturing process.Products undergo extensive quality checks performed by a dedicated team of trained personnel, covering stages from raw material processing to dispatch. The company possesses various testing and inspection facilities, including PMI, Hydrostatic, Eddy Current, Ultrasonic, and others. This rigorous quality assurance system contributes to low rejection rates. On average annually in Fiscal 2024, approximately 2.6% of products were rejected internally by quality control systems, and only about 0.31% were rejected by customers. Maintaining such low rejection rates is a significant strength as it enhances customer satisfaction, preserves brand value, and reduces costly rework or returns.

Risks:

• Significant Customer Concentration: The company's revenue is heavily concentrated among its top customers1. For the nine months ended December 31, 2024, the top 10 customers accounted for a substantial 57.78% of the revenue from operations, with the top 5 contributing 44.00%. This dependency means that losing any of these key customers or a reduction in their purchase volumes could have a material adverse effect on the company's business, results of operations, and financial condition.The absence of long-term supply agreements with these customers means there is no assurance of continued business at historical levels. This concentration poses a notable risk to revenue stability.
• Dependence on Stockist Network for Sales: The company relies significantly on a network of stockists for the sale and distribution of its stainless-steel products.This includes exclusive stockists in India (Maharashtra) and the United States. The success of sales activities is largely dependent on the relationships and effectiveness of these stockists. Any termination of agreements with these stockists or their failure to market and sell products effectively could materially and adversely affect the company's business, results of operations, and financial condition. Identifying and appointing replacement stockists in a timely manner upon losing existing ones also presents a challenge
• Sensitivity to Demand from Key Industrial Sectors: The company's business and profitability are substantially linked to the demand from specific industrial sectors that are major end-users of stainless-steel tubes and pipes, such as Oil and Gas, Chemicals, Fertilisers, Power, Pharmaceuticals, Automotive, Railways, and Transportation.Any downturn or reduced expenditure in these sectors due to various factors, including volatile raw material prices, changing regulations, trade restrictions, or global economic conditions, could negatively impact the demand for the company's products.This significant dependence on the activity levels of these specific industries makes the company vulnerable to sector-specific risks

Financial Snapshot:

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