Scoda Tubes IPO: Everything You Need to Know Before Investing

Scoda Tubes Limited is a Gujarat-based manufacturer specializing in stainless steel tubes and pipes, including seamless and welded variants. Established in 2008, the company operates a manufacturing facility equipped with advanced machinery, such as a hot piercing mill, to produce mother hollow—a critical raw material for seamless products

IPO Details

• IPO Dates: May 28 – May 30, 2025
• Issue Size: ₹220 crore (entirely fresh issue)
• Price Band: ₹130 – ₹140 per share
• Lot Size: 100 shares (minimum investment: ₹14,000)
• Listing: BSE and NSE
• Tentative Listing Date: June 4, 2025
• Registrar: Link Intime India Pvt Ltd
• Lead Manager: Monarch Networth Capital

Financial Performance

• Revenue Growth: From FY22 to FY24, Scoda Tubes achieved a Compound Annual Growth Rate (CAGR) of 44% in revenue, reaching ₹400 crore in FY24.
• Profitability: Net profit grew at a CAGR of 235%, amounting to ₹18 crore in FY24.
• Return Metrics: Return on Equity (RoE) stood at 28.77%, and Return on Capital Employed (RoCE) at 15.92% in FY24.

IPO Objectives

The proceeds from the IPO will be utilized for:

• Expanding production capacity of seamless and welded tubes and pipes.
• Meeting incremental working capital requirements.
• General corporate purposes.

Subscription Status (Day 1)

• Overall Subscription: 1.77 times
• Retail Investors: 1.8 times
• Non-Institutional Investors (NII): 2.0 times
• Qualified Institutional Buyers (QIBs): 1.4 times

Grey Market Premium (GMP)

• Current GMP: ₹18 – ₹23 per share
• Estimated Listing Price: ₹158 (approx. 12.86% premium over the upper price band)
• Trend: The GMP has shown slight fluctuations, with a peak at ₹23 and a low of ₹16 in recent sessions.

Expert Opinions

• Canara Bank Securities: Recommends ‘Subscribe’ for long-term investors, citing the company’s technical specialization, export growth, and alignment with industrial trends.
• SBI Capital Securities: Also advises ‘Apply’, highlighting strong financial growth and favorable industry outlook.
• Bajaj Broking: Maintains a ‘Neutral’ stance, suggesting a cautious approach due to certain risk factors.

Risk Factors

• Customer Concentration: Heavy reliance on select stockists for both domestic and international sales poses a concentration risk.
• Cash Flow Efficiency: Concerns around cash flow management need to be addressed.
• Capacity Utilization: Plans for significant capacity expansion despite currently low utilization rates may impact profitability.

Conclusion

The Scoda Tubes IPO presents a compelling opportunity for investors, backed by strong financial performance and a clear growth strategy. However, potential investors should weigh the associated risks, such as customer concentration and cash flow efficiency, before making an investment decision.

Disclaimer: This blog is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.