Sambhv Steel Tubes Limited – IPO Reviews 2025, Analysis and Notes

Recommendation: Neutral

Key Highlights

Company Background:

Sambhv Steel Tubes Limited (“SSTL”) is among India’s leading manufacturers of Electric Resistance Welded (ERW) steel pipes and structural tubes (hollow sections) by installed capacity as of March 2024. It is the only company in India with a single-location, fully backward-integrated facility for ERW steel pipes and tubes, covering the entire value chain. As of Dec 31, 2024, SSTL produces finished products such as ERW, GP (pre-galvanized), and GI (galvanized iron) pipes using in-house manufactured sponge iron, blooms/slabs, and hot rolled (HR) coils. It is also one of only two Indian players manufacturing ERW pipes and hollow section tubes using narrow-width HR coils. The company’s rust-resistant products cater to diverse sectors including, infrastructure, agriculture, water transport, oil & gas, solar energy, fire systems, and telecom.

Market Opportunity:

The domestic steel pipes and tubes market is estimated to have grown at a CAGR of 5–6%, rising from 8.8 MTPA in FY2019 to 12.5–13.5 MTPA in FY2025, driven by government initiatives in urban infrastructure and oil & gas investments. Going forward, demand is expected to reach 18.5–20.5 MTPA by FY2029, growing at 8–9% CAGR. Structural infrastructure and irrigation will remain key drivers, accounting for 50–55% of total demand. The shift from traditional materials like cement and conventional steel to tubular steel is also supporting growth. Under the Amrit Bharat Station Scheme, 1,275 stations will be redeveloped using tubular steel, with each requiring 500–3,000 tons. Applications are expanding across airports, high-rise buildings, warehouses, data centers, and water tanks.

Backward Integrated Manufacturing Facilities:

SSTL’s fully integrated manufacturing operations include the in-house production of key intermediate products such as sponge iron, mild steel blooms/slabs, HR coils, GP coils, and CR coils, primarily used for captive consumption. These are further processed into final products including ERW black pipes and tubes (hollow sections), CRFH pipes, Corten steel pipes, GP pipes, GI pipes, and steel door frames. This backward integration enables SSTL to enhance operational efficiency, reduce production costs, ensure consistent raw material supply, and maintain strict quality control. Such integration provides SSTL with a significant competitive advantage in the steel pipes and tubes industry.

Focus on Value-Added Products:

SSTL continues to focus on developing value-added and customized products to meet evolving market trends and expand its customer base. Ongoing product innovation remains a core priority, enabling increased wallet share and a diversified product portfolio. In Fiscal 2025, SSTL commenced production of SS HRAP coils, SS CR coils, CRFH pipes, GP coils, and GP pipes. These offerings provide enhanced dimensional accuracy and surface finish, while expanding exposure to end-use industries such as hot and cold-water supply systems, telecommunications, infrastructure, construction, firefighting, irrigation, plumbing, poles, signage supports, fencing, and handrails, supporting diversification and market expansion.

Financials:

For the nine months ended December 31, 2024, the company reported revenue from operations of ₹1,016 crore. EBITDA stood at ₹106.4 crore, with an EBITDA margin of 10.5%. The net profit for the same period was ₹40.7 crore, reflecting a PAT margin of 4%. On the valuation front, at the upper price band of ₹82, the IPO is valued at an annualized 9MFY25 P/E of 44.5x based on post-issue capital.

Key Risks:

Key risks for SSTL include any increase in the cost or shortage in the supply of critical raw materials such as iron ore, coal, pellets, sponge iron, and mild steel scrap, which form over 72% of revenue from operations. SSTL also relies heavily on a few key distributors, contributing over 50% of total revenue, and faces intense competition from other structural steel tubes, pipes, and steel manufacturers.

Issue Highlights

Offer Structure

Lead Book Running Managers

• Nuvama Wealth Management Limited

• Motilal Oswal Investment Advisors Limited

Registrar to the Offer

• KFin Technologies Limited

Research Analyst

Vinay Kalani
vinay.kalani1@religare.com

Research Team

Ajit Mishra – ajit.mishra@religare.com
Abhijeet Banerjee – abhijeet.banerjee@religare.com
Gaurav Sharma – gauravsharma2@religare.com
Ashwani Harit – ashwani.harit@religare.com
Divya Parmar – divya.parmar@religare.com
Vinay Kalani – vinay.kalani1@religare.com
Rajan Gupta – rajan.gupta1@religare.com

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• Author: Religare Broking
• Last Updated: June 25, 2025