Incorporated in 2008, Scoda Tubes is a stainless-steel tubes and pipes manufacturer (both seamless and welded).Seamless pipes are pipes without a seam (end joints) and are manufactured using Round Bars whereas welded pipes are manufactured by welding the flat steel strips into a round / circular shape.

The company has one manufacturing plant which is strategically located at Ahmedabad-Mehsana Highway, Rajpur, Kadi, Mehsana, Gujarat in proximity of around 360 kilometres from the Mundra port, which serves as a key port for exports, and is located 23 kilometres from Inland Container Depot, ensuring sound access and connectivity, and aiding them in reducing logistics costs. Its manufacturing facility utilizes a plot of land measuring 21,199 sq. m and has separate seamless and welded divisions with product-specific equipment and machineries, including hot piercing mill, pilger mills, expanding machine, cold drawing lines, bright annealing furnace, eddy current testing machine, hydro testing machine, spectro testing machine, tensile testing machine TIG/MIG (tungsten inert gas/ metal inert gas) swelded tube mill, etc.

As of December 31, 2024, itsmanufacturing facility has an installed production capacity 10,068 tpaof seamless products and 1,020 tpaof weldedproducts. Further, it has storage facility at its manufacturing facility for the purposes of holding inventory of raw materials and finished products.

In addition, it operates a hot piercing mill for the production of mother hollow, which is the principal raw material for its stainless-steel seamless products. Currently, its hot piercing mill has a production capacity of 20,000 tonne per annum (tpa). The company completed the construction of its in-house hot piercing mill for the production of mother hollows in May 2022, with a capacity of 20,000 tonne per annum.

Seamless products formed 85% of the total revenues in 9MFY25 while welded products formed 0.62% of total revenues and others segment (which includes the sale of Mother hollow and scrap) formed 13.31%of total revenues. Since mother hollows are only used as the principal raw material for seamless products (but not welded products), Scoda Tubes shifted its focus to the production of seamless products from fiscal 2023, thereby resulting in a decrease in revenue derived from welded products.

The company products are broadly categorised into seamless tubes/pipes and welded tubes and pipes, under five product lines, namely - stainless steel seamless pipes, stainless steel seamless tubes, stainless steel seamless U tubes, stainless steel instrumentation tubes and stainless-steel welded tubes and U tubes.

The company market its products under the brand, Scoda Tubes. Its products are used by a diverse range of customers like engineering companies, EPC (engineering, procurement and construction) and industrial companies engaged in oil and gas, chemicals, fertilisers, power, pharmaceuticals, automotive, railways and transportation sectors.

The company basic raw material includes SS round bars for seamless products and SS coils for welded products. It mainly procure its raw materials domestically from various states such as Gujarat, Haryana, Maharashtra, Delhi Uttar Pradesh and West Bengal and a certain portion of raw materials are procured from China and Hongkong based on market availability, pricing and quality. SS round bars and SS coils are mainly procured through stainless steel manufacturers, suppliers and stockists depending on various factors including price.

The company cater to both the domestic as well as the international markets. In the domestic market, it sell its products to stockists, engineering, EPC and industrial companies engaged in oil and gas, chemicals, fertilisers, power, pharmaceuticals, automotive, railways and transportation sectors. In particular, it has a stockist based in Maharashtra authorised to exclusively sell its products in India. In the United States market, it has a stockist authorised to exclusively sell its products in the United States market. Further, it supplies products through stockists in Italy, Germany, Austria and Eastern European markets.

For the nine months period ended December 31, 2024, it supplied to a total of 26 stockists in the domestic and international markets. In the nine months period ended December 31, 2024, it has exported to 11 countries including United States, Germany, Netherlands, Italy, Spain and several others. The revenues from exports aggregated to Rs 100.996 crore for nine months period ended December 31, 2024 forming 27.96% of total revenue.

The company is an ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certified by TUV SUD South Asia Private Limited. It follows internationally recognized standard manufacturing practises, including ASTM(American society for testing and materials) standards, ASME (American society of mechanical engineers) standards and EN standards. Its products sold to the European market are certified under PED 2014/68/EU and ADW/AD 2000 – Merkblatt – W0 from TUV Nord. Further, it hold accreditation from the Indian Boiler Regulation for manufacturing and supply of stainless steel seamless and welded products, DNVCP- 0252 certification for steel pipes and fittings and DNV marine certificate for application in ship building and marine industry. It also complies with relevant standards stipulated by Engineers India Limited and it has made an application for renewal of its Bureau of Indian Standard licence for stainless steel seamless pipes and tubes for general service.

Promoters of the company are Samarth Patel, Jagrutkumar Patel, Ravi Patel, Saurabh Patel, VipulkumarPatel.

The Offer and the Objects

The offer comprises fresh issue of up to 15714286 equity shares at the upper price band of Rs 130 and 16923077 equity shares at the lower price band of Rs 140 aggregating Rs 220 crore.

The company proposes to utilise the net proceeds from the issue towards capital expenditure related to expanding production capacity of seamless and welded tubes and pipes amounting Rs 76.99 crore, funding the part incremental working capital requirements of the company amounting Rs 110 crore and the balance towards general corporate purposes.

The company is expanding capacity of stainless steel seamless products by approximately 10,000 tpa to reach a totalcapacity of 20,068 tpa and stainless steel welded products byapproximately 12,130 tpa to reach a total capacity of 13,150 tpa. Total project cost is Rs 104.984 crore. Seamless manufacturing facility is expected to start commercial production by January 2026 and welded manufacturing facility is expected to start commercial production by March 2026.As of December 31, 2024, the company’s outstanding working capital facility in the form of short-term borrowings is Rs 118.616 crore.

Strengths

The company is a tubes and pipes manufacturer, specialising in the production of seamless and welded products in a single metal category, i.e., stainless steel. Since its inception, it has been catering to customers (both domestic and international) in only one metal segment and as a result, over the years it has built expertise in terms of the production process, inventory management and sale of products in the stainless-steel tubes and pipes segment, as well as the ability to accurately assess and respond to customer preferences in this segment.

The company follow internationally recognized standard manufacturing practises, including ASTM standards, ASME standards and EN standards, and its manufacturing facility benefits from the quality benchmarking certifications

Scoda Tubes ability to produce its principal raw material enables it to achieve backward integration of seamless products processes, allowing it to control production costs and reduce reliance on suppliers. Currently, any quantities of mother hollow in excess of its captive consumption are sold in the open market. In addition to its manufacturing business of seamless tubes/pipes and welded tubes and pipes, it also generate revenue from sale of services which consists of revenue earned from job work services like annealing, straightening, pickling and marking provided to other customers.

The company has built up a broad and geographically diversified customer base with more than 232 active customers for the fiscal 2025. This varied customer-base results in greater revenue diversification andmore sustainable operations in the longer term, hedging its business operations from potential sector-specific risks and reducing the market risk of being over dependent on a single industrial sector or geographical location.

The current manufacturing facility is strategically located to enable easy and seamless access to key ports and junctions for efficient supply of products. Its manufacturing facility is in close proximity, of around 360 kilometres from the Mundra port, which is a key port for exports, and Inland Container Depot which is located 23 kilometres away, ensuring sound access and connectivity aiding it in reducing logistics costs.

India imposed anti-dumping duty on stainless steel seamless tubes and pipes imports from China in 2022 for five years which resulted in increase in the capacity utilization rates of domestic stainless-steel tubes and pipes manufacturers and is expected to continue to provide benefits to the domestic players in terms of operational efficiencies and margins. Additionally, in September 2024, the government extended the anti-subsidy duty, initially imposed in 2019, on the imports of welded steel tubes and pipes from China and Vietnam to India. The government had imposed a 29.88% duty on all tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel) which is expected to keep a check on the steel tubes and pipes that are imported at predatory prices and hence, will support the growth in domestic steel tubes and pipes industry.

Global demand for stainless steel pipes and tubes increased from approximately 2.7 million tonnes per annum (mtpa) in 2019 to approximately 3.1 mtpain 2023, clocking a CAGR of about 3%. Between 2023 and 2028, the demand for stainless steel pipes and tubes is expected to increase at a CAGR of 3-4% to approximately 3.65-3.75 mtpa in 2028.

Domestic demand for stainless steel pipes and tubes increased from 0.23 mtpain fiscal 2020 to 0.32 mtpain fiscal 2024, clocking a CAGR of approximately 9% during the period. Between fiscals 2024 and 2029, the domestic demand for stainless steel pipes and tubes is expected to increase at a CAGR of 6-8% to 0.45-0.47 mtpain fiscal 2029. This healthy growth in the demand will primarily be led by strong growths in major end use industries of stainless-steel pipes and tubes such as building and construction, automobile, oil and gas, chemical manufacturing, food and beverage, etc.

The government’s policies to boost local production and increase the competitiveness of Indian industries through Make in India and Aatma Nirbhar Bharat initiatives would pave a way of opportunity for thestainless-steel pipe manufacturing sector. Further, government’s policies, announcements, high budgetary allocations towards railways, roads, civil aviation, gas pipelines for affordable housing are expected to drive demand for steel products including stainless steel tubes and pipes. Additionally, the policies such as Production Linked Incentive (PLI), Jal Jeevan Mission, PM Jivan Yojana targeting development in varioussectors like infrastructure and housing development pose a unique opportunity for stainless steel tubes and pipes sector.

Weaknesses

Stainless steel pipes and tubes are resource intensive and could face difficulty in adhering to potentially stringent environmental norms, policies and regulations going forward. Also, import or export related restrictions and tariffs can disrupt global supply chain and hence impact the demand for stainless steel pipes and tubes globally.

The prices of stainless steel are highly volatile. This exposes the profitability of the company to risk associated with any sharp adverse variations in the raw material prices

Economic slowdowns across globe or even in a few important areas of the world can impact the operations of key end use industries such as oil and gas, construction, and automobile and hence can lead to a sudden fall in demand for stainless steel pipes and tubes as well.

The steel tubes and pipes industry is intensely competitive and fragmented marked by the presence of both larger players and numerous smaller players in the unorganized segment.

The demand of steel tubes and pipes industry is considered cyclical as it depends upon the capital expenditure plan of major players in the end user industry. Company derives its substantial revenue from industries such as refineries, power plants, fertilizer, petrochemical, etc. Its revenue stream is largely linked to new investment in these sectors considering low replacement demand for these products.

The company had negative reported negative net cash from operations in the past.

The company is exposed to the risk of unsecured loans being recalled by lenders at any time, which could strain cash flows and liquidity

The company is required to obtain and maintain various approvals, licences, registrations and permits, including, various consents from pollution control boards. If it fails to obtain, renew, or maintain the statutory and regulatory permits and approvals it could have a material adverse effect on business.

The company is subject to strict quality requirements, regular inspections and audits by customers, and any failure to comply with quality standards may lead to cancellation of existing and future orders and could negatively impact business, financial condition, results of operations and prospects.

Valuation

For FY2024, consolidated sales were up by 31% to Rs 399.86 crore. OPM rose 330 bps to 14.7% which led to 69% increase in operating profit to Rs 58.79 crore. Other income fell 1% to Rs 2.63 crore and interest cost increased 65% to Rs 19.09 crore while depreciation jumped 43% to Rs 16.39 crore. PBT increased 80% to Rs 25.94 crore. Tax expenses were 89% higher at Rs 7.64 crore. Net profit increased 77% to Rs 18.30 crore.

FY2024 EPS on post-issue equity works out to Rs 3.1. At the upper price band of Rs 140, P/E works out to be 46

As of 26May 2025, its listed peers such as Ratnamani Metals & Tubestrades at FY2024P/E of 33, Venus Pipes & Tubestrades at FY2024P/E of 36, Welspun Specialty Solutions trades at FY2024 P/E of 35 and Suraj trades at FY2024 P/E of 33

For FY2024, Scoda Tubes Ebitda margin and ROE stood at 14.7% and 28.8% compared to 17.7% and 19.9% for Ratnamani Metals & Tubes respectively, 18.2% and 21.2% for Venus Pipes & Tubes, 8% and 67.1% for Welspun Specialty Solutions and 11.95% and 17.6% for Suraj.