Scoda Tubes Ltd. will open its initial public offering on Wednesday, which will close on May 30.

The company had filed for a Rs 275-crore maiden offer, which has been reduced to Rs 220 crore following a pre-IPO placement round. The IPO consists only of fresh issues and no offer for sale, according to the red herring prospectus.

The Scoda Tubes IPO price band is set at Rs 130 to Rs 140 per share. Investors can place bids starting from a minimum of 100 shares and in multiples thereafter. The minimum amount of investment required by retail investors is Rs 13,000.

Based on the upper price band, the company is valued at Rs 839 crore.

The public issue will be managed by Monarch Networth Capital Ltd. and Link Intime India Pvt.

After the allotment of shares on June 2, the stock will be listed on the NSE and BSE on June 4.

Scoda Tubes IPO: About The Company

Gujarat-based Scoda Tubes is a stainless-steel tubes and pipes manufacturer, catering to a diverse range of customers like engineering companies, EPCs, and industrial companies engaged in oil and gas, chemicals, fertilisers, power, pharmaceuticals, automotive, railways, and transportation sectors.

The company has one manufacturing plant in Mehsana, Gujarat, which is in close proximity of around 200 kilometres from the Mundra port. Currently, the plant has a total installed capacity of 20,000 MTPA of mother hollow, 10,068 MTPA of seamless products, and 1,020 MTPA of welded products, according to the RHP.

In the previous financial year, Scoda Tubes exported to 16 countries, including the US, Germany, the Netherlands, Italy, Spain, and France.

Scoda Tubes IPO: Use Of Proceeds

The proceeds from the fresh issue of the Scoda Tubes IPO to the extent of Rs 110 crore will be allocated for partly funding working capital requirements in fiscal 2026 and 2027.

As of Dec. 31, the outstanding working capital facility in the form of short-term borrowings was Rs 118.6 crore. The net cash flow from operations was Rs 5.4 crore.

A sum of Rs 77 crore will be used for capital expenditure towards expanding the production capacity of seamless tubes and pipes by 10,000 million tonnes per annum and welded tubes and pipes by 12,130 MTPA. This involves civil and structural work, site development, plant and equipment and utilities.

Funds raised from the pre-IPO round were also directed towards capex.

The rest of the proceeds will be deployed for general corporate purposes.

Financial Performance

On the financial front, Scoda Tubes posted a Rs 361 crore revenue from operations and a net profit of Rs 25 crore for the period ended December 2024. Earnings before interest, tax, depreciation and amortisation stood at Rs 61 crore, reflecting a margin of nearly 17%.

The company registered a 31% year-on-year growth in revenue at Rs 400 crore and a 77% surge in net profit at Rs 18.3 crore for the financial year ending March 31, 2024. The operating margin improved from 11.4% in FY23 to 14.7%.

Scoda Tubes IPO GMP

The grey market premium for the Scoda Tubes stock is around Rs 22 per share, indicating a potential listing price of Rs 162 per share, which is around 17% higher than its listing price of Rs 140, according to Investorgain.com.

The GMP has increased from Rs 16 quoted earlier.

Scoda Tubes: Key Risks

  • Working Capital Strain: Debtor days increased from 62 in fiscal 2023 to 82 in fiscal 2024, leading to a rise in working capital days from 151 to 162, potentially impacting revenue conversion.

  • Reduced Liquidity: The current ratio declined from 1.22 in fiscal 2022 to 1.09 in fiscal 2024, suggesting a decreased ability to meet short-term financial obligations.

  • Raw Material Price Volatility: Fluctuations in raw material prices, particularly stainless-steel round bars, pose a risk to profit margins.

  • Energy Cost Impact: High and volatile gas pipeline and oil prices could negatively affect government and consumer spending, thereby impacting demand.

  • Geopolitical and Trade Risks: Geopolitical tensions, trade barriers, taxes, and restrictions could limit raw material access, export potential, and market growth.

  • Import Competition: Cheaper imports of stainless-steel tubes and pipes could put pressure on sales and margins.

  • Regulatory Uncertainty: Changes in government policies, customs duties, and regulations introduce further uncertainty to the business environment.

Scoda Tubes IPO: Analyst Commentary

Valuation-wise, while Scoda Tubes’ fundamentals are supported by long-term infrastructure demand and government-led initiatives such as “Make in India” and “Atmanirbhar Bharat”, current financial ratios and industry pressures suggest that the stock is fairly valued at present levels, said a note from Bajaj Broking Ltd.

Sectoral demand for its products continues to remain strong in the infrastructure and industrial segment. At the current price band, the IPO is a decent opportunity for someone seeking to play out the infrastructure and industrial growth story in India, said Vaqar Javed Khan, senior fundamental analyst at Angel One Ltd.

. Read more on IPOs by NDTV Profit.The Scoda Tubes IPO price band is set at Rs 130 to Rs 140 per share. Know all about the company as it hits the D-Street.  Read MoreIPOs, Markets, Business, Notifications 

​NDTV Profit