Scoda Tubes IPO opens today: Should you subscribe to it?

The initial public offering (IPO) of Scoda Tubes shall open for bidding on Wednesday, May 28 and the one can apply for the issue till Friday, May 30. The metal player is selling its shares in the range of Rs 130-140 apiece and investors can apply for a minimum of 100 equity shares and its multiples thereafter.

The IPO of Scoda Tubes is entirely a fresh share sale of 1,57,14,286 equity shares amounting to Rs 220 crore. The net proceeds from the issue shall be utilized towards capital expenditure towards expanding production capacity of seamless and welded tubes and pipes; funding the incremental working capital requirements; and general corporate purposes.

Incorporated in 2008, Ahmedabad-based Scoda Tubes is a manufacturer of stainless-steel tubes and pipes. Its products are broadly categorized into two types- seamless tubes/pipes and welded tubes/pipes. It markets its products under the brand name 'Scoda Tubes.' It has its manufacturing facility on Ahmedabad-Mehsana highway in Rajpur.

Ahead of its IPO, Scoda Tubes raised Rs 66 crore from six anchor investors as it allocated 47.14 lakh equity shares at a price of Rs 140 apiece. Its anchor book included names like Malabar India Fund, MNCL Capital Compounder Fund, Aarth AIF Growth Fund, IMAP India Capital Investment Trust, Chhatisgarh Investments and Swyom India Alpha Fund.

Its customers include engineering companies, EPC firms, and industrial companies across sectors such as oil and gas, chemicals, fertilizers, power, pharmaceuticals, automotive, railways, and transportation. Its products are exported to 16 countries including the US, Germany, Netherlands, Italy, Spain, France and more through 49 stockists.

For the nine months ended on December 31, 2024, Scoda Tubes reported a net profit of Rs 24.91 crore with a revenue of Rs 363.48 crore. The company clocked a net profit of Rs 19.30 crore with a revenue of Rs 402.49 crore for the financial year ended on March 31, 2024.

Scoda Tubes has reserved 50 per cent of shares for the qualified institutional bidders (QIBs), while non-institutional investors (NIis) will have 15 per cent of the allocation in the issue. Retail investors will have 35 per cent of the quota reserved in this IPO. The company shall command a total market capitalization close to Rs 840 crore.

Monarch Networth Capital is the sole book-running lead manager of the Scoda Tubes IPO, while MUFG Intime India (Link Intime) is the registrar for the issue. Basis of allotment shall be finalized on Monday, June 02. Shares of the company shall be listed on both NSE and BSE with Wednesday, June 4 as the tentative date of listing. Here's what brokerages suggest for Scoda Tubes IPO:

SBI Securities
Rating: Subscribe
Scoda Tubes is valued at 9MFY25 annualized P/E and EV/Ebitda multiple of 21.8 times and 9.6 times at post-issue capital of upper price band respectively. Its revenue, Ebitda and PAT, achieved a CAGR of 44 per cent, 143 per cent and 235 per cent to Rs 400 crore, Rs 59 crore and Rs 18 crore during FY22-FY24 period, said SBI Securities.

"The industry forecast indicates healthy growth for the Indian SS pipes and tubes which is projected to expand at a CAGR of 6-8 per cent for the FY24-FY29E period. We recommend the investors to 'subscribe' the issue at cut-off price," it said.


Canara Bank Securities
Rating: Subscribe
Scoda Tubes's technical specialization, backward integration, and global certification profile support its position as a long-term player in the precision stainless-steel manufacturing space. Rising export contributions, high-margin seamless product focus, and alignment with industrial and infrastructure growth trends bolster its long-term scalability, said Canara Bank Securities.

"Scoda is valued at a P/E of 30.43 times and a P/B of 8.76 times on FY24 basis, reasonably in line with industry peers. While concerns around cash flow efficiency and dependency on key distributors remain, its consistent profitability, asset-backed expansion, and sector tailwinds make it an attractive proposition. We recommend 'subscribe' for long-term investors," it said.

Bajaj Broking
Rating: Neutral
Scoda Tubes has shown consistent operational growth, supported by its specialized focus on stainless steel tubes and pipes, integrated manufacturing operations, and strategic plant location. Its benefits from promoter experience, international accreditations, and diversified customer and geographic presence, said Bajaj Broking.

"Considering the operational strengths but also factoring in the existing working capital challenges, market risks, and margin pressures, we maintain a neutral view on Scoda Tubes. The outlook remains stable, with medium-term performance likely to depend on improved cash flow management, sustained demand from infrastructure sectors, and mitigation of external risks," it said.

SMIFS
Rating: Subscribe
Favourable trade protection measures, such as a 29.88 per cent duty on welded imports and anti-dumping duties on seamless imports, provide additional pricing power and shield domestic players like Scoda from predatory competition. Financially, Scoda has demonstrated a scalable business model, said SMIFS.

"We recommend subscribe to the issue as a good long term investment as with sufficient land bank for future expansions, strong policy tailwinds and an increasing share of premium products Scoda is expected to witness improved utilization, rising EBITDA margins and doubling of revenue over the next 18 to 24 months," it said.

Arihant Capital Market
Rating: Subscribe with rating
Scoda Tubes with its strong focus on stainless-steel tubes and pipes, robust international certifications, integrated manufacturing capabilities, and consistent financial growth, the company is well-positioned to capitalize on rising global and domestic demand across diversified industries, said Arihant Capital Markets.

"Continued investments in production infrastructure and expansion of its accredited product portfolio are expected to drive further market penetration and operational efficiency. The issue has a P/E ratio of 25.23 times, based on annualised 9MFY25 EPS of Rs 5.5. We assign a 'subscribe for long term' rating for this issue," it said.

Anand Rathi Shares & Stock Brokers
Rating: Subscribe for long-term
Scoda Tubes leverages a modern manufacturing process that enables cost-effective production, enhancing operational efficiency. It has an order book worth Rs 130 crore. Rising demand across the industries bodes well. This being a capital intensive segment, surplus working capital availability and proposed expansion will further improve its top and bottom line, said Anand Rathi.

The issue is fully priced. We believe that the company's key differentiator is its manufacturing process of its crucial raw material which enables backward integration, enabling Scoda Tubes to exercise greater control over production costs, reduce dependence on third-party suppliers, and improve overall operational efficiency, said 'subscribe for long-term' rating.

BP Equities
Rating: Subscribe
Scuba Tube has delivered a revenue CAGR of 43.6 per cent between FY22 and FY24, while expanding its Ebitda margin from 5.1 per cent to 14.7 per cent, reflecting operational leverage and better product mix. Though high interest costs remain a concern, PAT margins have improved to 4.6 per cent, and the interest coverage ratio has strengthened to 3.1 times, said BP Equities.

"The company continues to exhibit efficient capital use, with ROE at 28.8 per cent and ROCE at 15.9 per cent, positioning it favorably to leverage sectoral growth while maintaining profitability and scale. The issue is valued at a P/E ratio of 17.3 times on the upper price band based on FY25 earnings, which is relatively cheaper compared to its peers," it said with a 'subscribe' rating.