Scoda Tubes IPO Is Live: Should You Subscribe?
Get a detailed overview of Scoda Tubes Ltd’s IPO, including Financial Analysis, Key Strengths, GMP, Risk Factors and Expert Verdict.
Stainless steel product maker Scoda Tubes Ltd launched its initial public offering (IPO) on May 28, 2025, with bidding closing on May 30, 2025. Ahead of the opening, the grey market premium (GMP) climbed to Rs 18, reflecting a 13% premium.
However, investors are advised to carefully consider both the opportunities and risks before subscribing. For a detailed review, see our comprehensive IPO analysis here.
Scoda Tubes IPO Details
- Issue Details: Mainstream
- Issue Size: Rs 220 crore
- Price Band: Rs 130 – Rs 140
- Lot Size: 100 shares
- Listing Date: June 4, 2025
Overview of Scoda Tubes Ltd
STL is a stainless steel tubes and pipes manufacturer with over 14 years of industry experience. Its product portfolio is broadly divided into two categories: (i) seamless tubes and pipes, and (ii) welded tubes and pipes.
The company operates a strategically located manufacturing plant on the Ahmedabad-Mehsana Highway in Gujarat. As of December 31, 2024, the facility has an installed capacity of 20,000 MT per annum for mother hollow, 10,068 MT per annum for seamless products and 1,020 MT per annum for welded products.
Scoda Tubes Key Strengths
- Robust Financial Growth: From FY22 to FY24, STL delivered a strong CAGR of 44% in operational revenue, 143% in EBITDA and 234% in net profit.
- Solid Return Metrics: STL demonstrates strong operational efficiency with impressive return metrics— Return on Equity (RoE) at 28.77% and Return on Capital Employed (RoCE) at 15.92% in FY24.
- Expanding Profit Margins: Profitability has steadily improved, with EBITDA margins increasing from 5.15% in FY22 to 14.70% in FY24 and net profit margins rising from 0.84% to 4.58%, reaching 6.9% by December 2024.
Scoda Tubes Risk Factors
- Client Concentration: As of December 31, 2024, approximately 58% of STL’s revenue is derived from its top 10 customers. A decline in business from these key customers could adversely affect its operations and results.
- Leverage and Debt: As of March 31, 2024, the debt-to-equity ratio stood at 3.19, indicating significant reliance on borrowings. Elevated debt levels may lead to higher finance costs and pressure cash flows. Additionally, increases in interest rates could further raise borrowing expenses.
- Employee Retention: STL is experiencing a high attrition rate of nearly 20% as of December 31, 2024, which poses challenges in maintaining workforce stability and operational continuity.
Final Thoughts: Should You Subscribe to Scoda Tubes’ IPO?
STL is a prominent player in the stainless-steel pipes segment, with over a decade of operational experience. The company has demonstrated robust financial growth in recent years, reflected in both revenue and earnings.
From a valuation perspective, the IPO appears reasonably priced with a price-to-earnings (P/E) ratio of 30x based on FY24 earnings. The grey market premium (GMP) for the IPO further indicates a positive listing on the stock exchanges.
STL is embarking on a significant capex plan to nearly double its seamless pipe capacity and increase welded pipe capacity by ~13 times by March 2026. The medium-term outlook remains stable, with performance likely hinging on improved cash flow management and sustained demand from the infrastructure sector.
Although debt levels warrant caution, STL’s solid financial performance, diversified product range, fair valuation and stable outlook make it a suitable investment opportunity for long-term investors.
For a deep dive into other IPOs, explore: IPO Corner on Liquide