Scoda Tubes IPO analysis

Scoda Tubes IPO (initial public offering) will open for subscription on May 28, 2025, and close on May 30, 2025. Below is a breakdown of the steel pipes manufacturer’s strengths, weaknesses and growth prospects to help investors make an informed decision. Scoda Tubes IPO in a nutshell Quality: Between FY22 and FY24, Scoda Tubes reported a three-year average return on equity (ROE) and return on capital employed (ROCE) of around 21 and 13 per cent, respectively. Growth: Between FY22 and FY24, its revenue and net profit grew annually by 44 and 235 per cent, respectively. Valuation: At the upper price band of Rs 140, the stock is expected to be valued at a P/E and P/B ratio of around 46 and 2.3 times, respectively. In comparison, its peers are valued at a median P/E ratio of 33 times and an average P/B ratio of 6 times. Overview: Scoda Tubes is looking to capitalise on the growing global and domestic infrastructure investments, with the stainless steel market expected to see robust demand from sectors like oil & gas, power, and pharmaceuticals. However, the business remains exposed to raw material price volatility, sectoral cyclicality and pricing pressure from both domestic and foreign competitors. About Scoda Tubes Scoda Tubes manufactures and sells seamless stainless steel and welded tubes and pipes for industrial applications across oil & gas, power, chemicals, pharmaceuticals, and transportation sectors. As of December 2024, it operated with an installed capacity of 10,068 million tonnes per annum (MTPA) for seamless tubes and 1,020 MTPA for welded tubes at its manufacturing facility in Mehsana, Gujarat.  The company is backward integrated with an in-house hot piercing mill (machines to make hollow tube/shell) for producing mother hollow, key raw material for seamless tubes. It caters to both domestic and global clients across more than 15 countries. As of FY24, the company generated 21 per cent of the revenue from exports.  It derives nearly 47 per cent of revenue from engineering companies while domestic dealers contribute 23 per cent. Another 21 per cent of revenue comes from selling leftover mother hollow and scrap. Strengths of Scoda Tubes Backward integration: Scoda is among the few Indian players with a hot piercing mill to produce mother