Sambhv Steel Tubes IPO analysis

Sambhv Steel Tubes IPO (initial public offering) will open for subscription on June 25, 2025, and close on June 27, 2025. Below is a breakdown of the pipes and tubes manufacturer's strengths, weaknesses and growth prospects to help investors make an informed decision. Sambhv Steel Tubes IPO in a nutshell Quality: Between FY22 and FY24, Sambhv Steel Tubes reported a three-year average ROE and ROCE of around 36 and 25 per cent, respectively. Growth: Between FY22 and FY24, its revenue and net profit grew by 25 and 7 per cent per annum, respectively. Valuation: At the upper price band of Rs 82, the stock is expected to be valued at a P/E and P/B ratio of around 29 times and 2.6 times, respectively. In comparison, its listed peers trade at a median P/E and average P/B ratio of 29 times and 5 times, respectively. Overview: The company is set to benefit from strong demand for welded pipes and tubes, led by growing government spending on affordable housing, Jal Jeevan Mission, Har Ghar Nal Yojana and other schemes aimed at improving city-level gas distribution networks and oil and gas transmission pipelines . However, the fragmented nature of the industry and competition from other established players remain a risk for the company. About Sambhv Steel Tubes Sambhv Steel Tubes is a leading manufacturer of high-quality ERW (electric resistance welded) pipes and tubes, which are produced from steel and are extensively used in the oil and gas and infrastructure sector. The company prides itself on its backward integration model, which allows it to control the entire production process from manufacturing steel coils to producing the final product. Its manufacturing facility in Raipur is strategically located, providing proximity to essential raw materials like iron ore and coal, which helps reduce production costs. The company currently has a total annual installed capacity of 17 lakh metric tons. As of FY24, it had a market share of around 2 per cent in the domestic ERW pipe market by sales volume. Strengths of Sambhv Steel Tubes Backward integration: Sambhv Steel is the only ERW pipe and tube manufacturer with a single-location, backward integrated manufacturing facility in India. This facility produces sponge iron, HR coils, and stainless steel coils, enabling the company to reduce raw material procurement and inventory costs. Weaknesses of Sambhv Steel Tub