Sambhv Steel Tubes' Rs 540 crore IPO opens for subscription: Should you apply or avoid?

Sambhv Steel Tubes’ Rs 540 crore IPO opened for subscription on June 25 and will close on June 27. With a blend of fresh issue and OFS, the IPO aims to reduce debt and fund corporate growth. Here’s all you need to know

About the IPO

Sambhv Steel Tubes launched its Rs 540 crore IPO on June 25, 2025, with subscriptions open until June 27. The issue comprises a Rs 440 crore fresh issue and a Rs 100 crore offer for sale by promoters. Proceeds will primarily go towards debt repayment and general corporate purposes.

The price band is Rs 77– Rs 82 per share, with a minimum lot size of 182 shares. Retail investment ranges from Rs 14,014 to Rs 14,924. Employees are offered a Rs 4 discount on up to 3.2 lakh reserved shares.

Managed by Nuvama and Motilal Oswal, with Kfin Technologies as registrar, the stock will list on NSE and BSE on July 2, with allotment on June 30. Sambhv is among India’s leading ERW pipe manufacturers, backed by a backward-integrated model that enhances cost efficiency and margins.

See the issue details below.

Objects of the Issue

1. Repayment of borrowings: Around Rs 3.90 crore will be used to prepay or repay a portion of outstanding loans, primarily taken for capacity expansion, machinery purchase, and infrastructure development.
2. General corporate purposes: The remaining funds will support working capital, business operations, and strategic initiatives.

Promoter

The promoters of Sambhv Steel Tubes Limited are Brijlal Goyal, Suresh Kumar Goyal, Vikas Kumar Goyal, Sheetal Goyal, Shashank Goyal, and Rohit Goyal

Company Profile & Business Overview: Sambhv Steel Tubes Limited
Incorporated in 2017, Sambhv Steel Tubes Limited is a backward-integrated steel manufacturer producing electric resistance welded (ERW) pipes and structural hollow section tubes. Its primary operations are based in Sarora (Tilda), Raipur, Chhattisgarh—strategically located near key raw materials like iron ore (sourced from a Navratna PSU) and coal (from a Maharatna PSU subsidiary), enabling lower procurement costs.

The company ranks among India’s leading ERW pipe manufacturers by installed capacity (as of March 31, 2024). Its fully integrated production—from sponge iron to finished pipes—ensures cost efficiency and quality control. It is also among the few Indian players capable of producing stainless steel coils in-house.

Sambhv’s product portfolio spans sponge iron, blooms/slabs, HR/CR coils, ERW pipes, pre-galvanized (GP) and galvanized (GI) pipes, stainless steel coils, and steel door frames. It held about 2 per cent domestic market share in ERW pipes (by volume) in FY24.

In FY25, the company added a second plant in Kuthrel, Raipur and plans a greenfield expansion in Kesda, Baloda Bazar. It has a distribution network across 15 states and one union territory, supported by 43 distributors and over 700 dealers, with plans to expand in southern India and international markets. Its total annual installed capacity stands at 17 lakh metric tons.

Industry Outlook

India’s domestic steel industry has demonstrated robust growth, with a CAGR of 7–8 per cent from FY2019 to FY2025, reaching 152 million tonnes in FY2024. This momentum is projected to continue, with demand estimated to reach 210–230 million tonnes by FY2030. The steel pipes and tubes segment has grown steadily at a 5–6 per cent CAGR, with demand expected to rise from 12.5–13.5 MTPA in FY2025 to 18.5–20.5 MTPA by FY2029 at a higher 8–9 per cent CAGR. Stainless steel coil demand is also forecast to grow at 7–9 per cent CAGR, driven by industrial and infrastructure applications.

This growth is propelled by infrastructure investments under the National Steel Policy 2017, rising urbanisation, and government initiatives such as the Jal Jeevan Mission and Amrit Bharat Station Scheme. Key demand sectors include construction, infrastructure, water supply, and automobiles. Moreover, India’s low per capita steel consumption (98 kg vs. global average of 219 kg) presents significant long-term growth potential.

Sambhv Steel Tubes Limited: Key Financial Performance Indicators

 (Source – Company’s RHP)

Key Financial and Performance Indicators for Sambhv Steel Tubes Limited (in  Rs  crore):

(Source – Company’s RHP)

(Source – Company’s RHP)

Sambhv Steel Tubes Ltd. posted a 16.2 per cent revenue CAGR between FY22–FY24, earning Rs 1,016.10 crore in 9MFY25—79 per cent of FY24’s total. However, this growth comes with rising operational concerns.

Trade receivables rose 870 per cent since FY22, far outpacing 124 per cent sales growth, with their share of revenue increasing from 1.91 per cent to 13.39 per cent. This points to weaker collections or lenient credit terms. Inventories rose 74 per cent YoY to Rs 260.04 crore in 9MFY25, suggesting either demand anticipation or turnover inefficiencies. Both trends signal rising working capital dependence—raising early liquidity concerns.

Most notably, operating cash flow turned negative at Rs 42.13 crore in 9MFY25, down from Rs 142.43 crore positive in FY24—despite strong revenue. The cash conversion cycle lengthened to 58 days from 41, reflecting operational inefficiencies. Rising receivables, higher inventories, and negative cash flow indicate a working capital mismatch that could strain self-funded growth. Maintaining financial discipline and improving cash conversion will be critical.

The company’s asset base expanded from Rs 458.51 crore in FY22 to Rs 1,411.82 crore in 9MFY25, driven by both fixed and working capital. PPE and CWIP grew sharply, reflecting capacity expansions at Sarora (Tilda) and Kuthrel. Current assets surged, with receivables rising from Rs 15.64 crore to Rs 136.02 crore and inventories from Rs 121.51 crore to Rs 260.04 crore—locking up more cash and increasing liquidity risk.

Borrowings rose from Rs 241.29 crore in FY22 to Rs 619.15 crore in 9MFY25 (Rs 554.59 crore as of April 30, 2025), funding capex and working capital. However, despite Rs 55.70 crore in profit before tax, cash flows turned negative due to a Rs 204.54 crore working capital outflow (Rs 110.98 crore in inventories, Rs 42.10 crore in receivables, Rs 51.46 crore in other assets). A drop in liabilities worsened the situation, with higher trade payables unable to fully offset the drain. Unless addressed, persistent negative cash flows may impact liquidity and constrain future growth.

Operational Data Metrics (Volume and Capacity)
Sambhv Steel Tubes Ltd. recorded a steady rise in sales volumes—from 157,384 MTPA in FY22 to 223,262 MTPA in FY24. In 9MFY25, volumes reached 198,956 MTPA. The slight annualized dip was due to higher captive consumption of intermediates like sponge iron and HR coils for in-house value addition.

ERW pipes and tubes ramped up significantly from nil in FY22 to 179,374 MTPA in FY24, and 156,468 MTPA in 9MFY25, reflecting the company’s shift towards a finished product-focused model. GI pipe volumes rose from nil in FY22 to 5,689 MTPA in FY24 but moderated to 1,426 MTPA in 9MFY25. Intermediate product volumes varied due to increased internal use.

EBITDA per ton declined from Rs 7,911 in FY22 to Rs 7,161 in FY24 and Rs 5,346 in 9MFY25, reflecting margin pressures from inflation, product mix shifts, and industry dynamics.

Installed capacity at the Sarora (Tilda) plant grew from 1.12 million MTPA in FY24 to 1.54 million MTPA in FY25, with expansions in sponge iron, billets, pipes, and stainless steel products. ERW pipe capacity utilization remained steady at 74 per cent.

The newly commissioned Kuthrel facility added 158,000 MTPA, targeting higher-margin products like GP coils and stainless steel coils. Utilization was moderate in 9MFY25, with cold rolled SS coils at 48 per cent and GP pipes at 37 per cent, reflecting early ramp-up stages.

Strengths and Risks: Sambhv Steel Tubes Limited

Sambhv Steel Tubes Ltd. is well-positioned for growth in India’s steel pipes and tubes segment, backed by several operational strengths. A key edge is its fully backward-integrated facility—the only one in India producing ERW pipes and tubes at a single location. This integration—covering sponge iron, MS blooms/slabs, and HR coils—enhances cost efficiency, quality consistency, and supply chain control.

Located in Raipur, Chhattisgarh, the plant benefits from logistical advantages due to proximity to raw materials and industrial hubs. The company’s diversification into high-margin products like GP coils, pre-galvanized pipes, CRFH pipes, and stainless steel variants broadens its reach across infrastructure, construction, and automotive sectors. Its distribution network—700 dealers via 43 branches across 15 states and one union territory—supports wider market penetration and scalability.

Operationally, the company delivered strong FY24 returns, with ROE at 25.42 per cent and ROCE at 17.66 per cent. Despite minor margin contraction, EBIT margin remained healthy at over 10 per cent. Debt-to-equity improved from 1.6 in FY22 to 0.8 in FY24, reflecting better financial discipline.

Industry demand is projected to grow at a 9 per cent CAGR till FY29, driven by government infrastructure spending and city gas distribution—providing strong macro tailwinds.

However, challenges remain. A key risk is distributor concentration, with the top 10 contributing nearly 52 per cent of revenue in 9MFY24, exposing the company to revenue volatility. Operating in a cyclical sector, Sambhv faces external risks from global demand-supply shifts, commodity prices, and geopolitical factors impacting steel prices.

Though leverage has declined, net debt-to-equity was still high at 1.3 as of December 2024, and reliance on external financing may persist due to the capital-intensive nature of the business.

Valuation and Outlook

Sambhv Steel Tubes Limited is the only ERW pipe and tube manufacturer in India with a fully backward-integrated, single-location facility. This integration—across sponge iron, HR coils, and stainless steel coils—offers strong supply chain control, cost efficiency, and reduced reliance on external raw materials, supporting margin stability and competitive strength.

Despite this edge, the company faces near-term headwinds due to delayed government infrastructure fund disbursements, resulting in higher trade receivables and negative cash flows in FY25. While pending payments are expected to be released, fresh allocations—especially in water infrastructure—may moderate in the short term.

Nevertheless, the medium-term outlook remains positive. Driven by urban infrastructure, housing, and oil & gas, domestic demand for steel pipes and tubes is projected to grow at a 9 per cent CAGR through FY29, benefiting organized players like Sambhv Steel.

The company has reported strong profitability over the past three years, though FY25 shows some moderation:

• RoE declined from 25.42 per cent in FY24 to 8.88 per cent (non-annualized) in 9MFY25
• RoCE fell from 17.66 per cent to 7.67 per cent in the same period

Despite the decline, capital deployment remains reasonably efficient amid capacity expansion.

Leverage has improved, with the debt-to-equity ratio falling from 1.6x in FY22 to 0.8x in FY24. However, net debt-to-equity rose to 1.3x as of December 2024, indicating temporary external funding—typical of capital-intensive businesses.

Post-IPO, Sambhv Steel’s market capitalisation stands at  Rs 2,416 crore, backed by investor confidence in its integrated model and growth strategy. Promoters hold a 56.1 per cent stake, reinforcing long-term commitment.

At the upper price band of Rs 82, the stock is valued at:

• P/E of 36.4x, and
• EV/EBITDA of 19.2x,
  based on annualized 9MFY25 earnings—a premium to the industry average P/E of 23x. Though elevated, these valuations are supported by the company's integrated operations, expansion plans, and consistent performance. IPO proceeds will be used to reduce debt and invest in its subsidiary, supporting growth.

Sambhv Steel offers a fundamentally strong, operationally integrated, and strategically positioned business. While short-term cash flow challenges persist, its long-term demand outlook and scalable model support a positive investment case.
We recommend subscribing to the IPO with a medium- to long-term investment horizon, given its differentiated positioning and growth potential.