Incorporated on 2017, Sambhv Steel is one of the key manufacturers of electric resistance welded (ERW) steel pipes and structural tubes (hollow section) in India in terms of installed capacity as of March 31, 2024. The company has 2 operational manufacturing facility located at Sarora (Tilda), Raipur, Chhattisgarh and Kuthrel, Raipur, Chhattisgarh. As of March 31, 2024, and March 31, 2025, it has a total installed capacity of 11,22,400 metric tonne per annum (MTPA) and 16,98,000 MTPA, respectively of high-quality steel (intermediate and finished) products. The company has recently expanded installed capacity at Sarora facility to handle higher volume of production thereby enhancing operational efficiency. The company have also operationalized its second manufacturing facility, i.e. Kuthrel facility in FY2025 and it primarily manufactures value added products such as pre-galvanized (GP) coils, GP pipes, Stainless steel (SS) HRAP (hot rolled annealed and pickled) coils, SS cold rolled (CR) coils at the Kuthrel facility.

The Sarora (Tilda), manufacturing facility is spread across 334,540 square meters and has a total installed capacity of 15,40,000 MTPA as of March 31, 2025 which includes sponge iron/direct reduced iron division for manufacturing sponge iron, steel melting shop division for manufacture of blooms/slabs (mild steel and stainless steel); hot rolled coil division for the production of narrow width HR coils (mild steel and stainless steel); cold rolled division for production of CR coils; tube mill division for the production of pipes and tubes and captive power plant.

The Kuthrel manufacturing facility was commissioned in FY2025 spread across an area of 73,980 square meters and has a total installed capacity of 1,58,000 MTPA as of March 31, 2025. The facility includes galvanizing division for manufacturing of GP coils and pre-galvanized (GP) pipes and stainless steel division for manufacturing of SS HRAP coils and SS CR coils.

The company has installed a captive power plant which, as of March 31, 2025, operates with an installed capacity of 25 MW (comprising a 16 MW waste heat recovery boiler (WHRB) and nine MW atmospheric fluidized bed combustion (AFBC) system) that provides a localized source of power to its Sarora facility.

As of December 31, 2024, the company has 37 distinct distributors with 2 distributors distributing through 6 branches in 15 states and one union territory taking the total distributor network to 43. These distributors in turn distribute the company’s finished products through over 700 dealers in India as of December 31, 2024. The company has a wide-spread presence in the Indian states of Chhattisgarh, Maharashtra, Gujarat, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana.

The company is planning to commission a greenfield manufacturing facility in Village - Kesda, District Baloda Bazar Bhatapara, Chhattisgarh. This facility will be operated by its Subsidiary, Sambhv Tubes Private Limited. The HR mill with an installed capacity of around 1.20 MPTPA for this facility has been procured and is in the process of being imported and around 395,378 square meters of land has been acquired by the company’s subsidiary, Sambhv Tubes Private Limited. Phase I is expected to be commissioned by fiscal 2027.

Brijlal Goyal, Suresh Kumar Goyal, Vikas Kumar Goyal, Sheetal Goyal, Shashank Goyal and Rohit Goyal are the promoters of the company.

The Offer and the Objects

The offer comprises fresh issue of up to 53658537 equity shares at the upper price band of Rs 82 and 57142857 equity shares at the lower price band of Rs 77 aggregating Rs 440 crore and an offer for sale up to 12195122 equity shares crore at the upper price band of Rs 82 and 12987013 equity shares crore at the lower price band of Rs 77 aggregating Rs 100 crore.

The company proposes to utilize the net proceeds from the issue towards pre-payment or scheduled re-payment of a portion of certain outstanding borrowings availed by the company amounting Rs 390 crore and the balance towards general corporate purposes. As of April 30, 2025, the total outstanding borrowings of the company are Rs 554.585 crore including Rs 549.058 crore of fund based borrowings and Rs 5.527 crore of non-fund borrowings.

Promoter Shashank Goyal post offer shareholding will decrease to 1.9% from pre offer shareholding of 2.89% while promoter Rohit Goyal post offer shareholding will decrease to 2.1% from pre offer shareholding of 3.09%, promoter Kaushlya Goyal post offer shareholding will decrease to 5% from pre offer shareholding of 10% and promoter Harsheet Goyal post offer shareholding will decrease to 2.1% from pre offer shareholding of 3.06%

Strengths

The company is amongst a very limited number of players in India, manufacturing stainless steel coils with backward integration and currently have the capability of manufacturing stainless steel (SS) blooms/slabs which are captively consumed to produce HR coil, hot rolled annealed pickled (SS HRAP) coil and CR coil.

The company is located in close proximity to its key raw material suppliers. It sources its iron ore requirements from a Navratnapublic sector undertaking mining company’s mines, which are known for producing India’s highest grade of iron ore. Further it sources its coal requirements from a Maharatna PSU through one of its highest coal producing subsidiary whose mines are Asia’s largest coal mines and are merely 250 kilometres from Sarora Facility

The company integrated manufacturing facility is designed in such a manner that it is able to respond swiftly to market demand for a particular size of pipe or tube as it control the end-to-end supply chain for its products unlike other industry players who rely on external coil manufacturers for supply of the required grade and size of HR coils.

The company’s Sarora facility has been certified with international standards of quality management systems such as ISO 9001:2015; environmental management systems such as ISO 14001:2015; occupational health and safety management systems such as ISO 45001:2018; and energy management systems such as ISO 50001:2018. Further, the company is certified with Dedal - Attestation and Certification Ltd, Bulgaria for conformity of the factory production control and have EN 10025-1:2004 and EN 10219-1:2006 certifications.

The company backward integration processes allow it to manufacture a range of finished products including ERW black pipes and tubes (hollow section), pre-galvanized (GP) pipes, Cold Rolled Full Hard (CRFH) Pipes and galvanized iron (GI) pipes and steel door frames, using intermediate products such as sponge iron, blooms/slabs and hot rolled (HR) coil, cold rolled (CR) coil (mild steel) and GP coils which are manufactured in-house.

The company is one of the two players in India manufacturing ERW steel pipes and tubes (along with hollow section pipes and tubes) using narrow-width HR coil, as of December 31, 2024. Its products are rust resistant and tailored to meet specific market requirements, ensuring wide application across multiple sectors including housing and infrastructure, water transportation, agriculture, automobile, telecommunications, oil and gas, engineering, solar energy, fire-fighting systems, and for support structures of conveyors.

The company produce narrow-width HR coil which allows it to manufacture ERW black pipes and tubes of thickness, as per customer requirements, and reduces its dependency on external HR coil suppliers, thus giving it a competitive edge. In fiscal 2025, it expanded its product portfolio to include additional value added products such as GP coils, pre-galvanized (GP) pipes, cold rolled full hard (CRFH) pipes, SS HRAP coils and SS cold rolled (CR) coils.

The domestic steel pipe demand is projected to grow at a CAGR of 8-9% between fiscal 2025 and fiscal 2029 to 18.50-20.50 MTPA. The growth would primarily be led by structural infrastructure and irrigation sector, which would continue to account for 50-55% of total domestic steel pipe demand. Further the demand for steel pipes and tubes will also be getting the push from the potential substitution of conventional construction materials, such as concrete cement and conventional steel.

Weaknesses

The company remains vulnerable to steel industry cyclicality, especially fluctuations in the prices of key raw materials like iron ore, coal, ferroalloys, and scrap despite the benefits of backward integration. Margins may compress during downcycles.

The company lacks a long-standing operational track record in this high-value segment as it has recently entered stainless steel coil production

The company is undertaking major greenfield and brownfield expansions which involve significant capex and execution risk. Delays or cost overruns could impact profitability and return ratios in the near term.

The company key manufacturing facilities are primarily concentrated in Chhattisgarh, particularly in Raipur, making it vulnerable to region-specific risks such as power supply disruptions, state-level regulatory changes, and natural calamities.

The company is required to obtain, renew or maintain statutory and regulatory permits, licenses and approvals to operate its business, and it may experience delays in obtaining, renewing or maintaining such licenses or permits or be unable to obtain such licenses and approvals.

The company witnessed negative operating cash flows in the past, and it is possible that it may experience negative operating cash flows in the future.

The company faces competition from domestic and international manufacturers of sponge iron, blooms/slabs, HR coils, ERW black pipes, GI pipes, GP coils, GP pipes, CR coils and stainless-steel products.

Valuation

For FY2024, consolidated sales were up by 37% to Rs 1285.76 crore. OPM fell 10 bps to 12.4% which led to 36% increase in operating profit to Rs 159.87 crore. Other income rose 103% to Rs 3.62 crore and interest cost increased 46% to Rs 31.82 crore while depreciation jumped 29% to Rs 20.91 crore. PBT increased 37% to Rs 110.77 crore. Tax expenses were 37% higher at Rs 28.33 crore. Net profit increased 37% to Rs 82.44 crore.

FY2024 EPS on post-issue equity works out to Rs 2.8. At the upper price band of Rs 82, P/E works out to be 29

Total outstanding borrowings amounted to Rs 554.585 crore as at April 30, 2025. As much as 70.3% of the debt will be repaid from the issue proceeds, bringing down interest costs substantially and boosting profit. The EPS works out to Rs 3.4 if 70.3% of its interest cost is removed, keeping all other items, including tax rate, same. The re-worked P/E at the upper price band moderates to 24.

As of 23 May 2025, its listed peers such as APL Apollo Tubes trades at FY2024 P/E of 68, Hariom Pipes Industries trades at FY2024 P/E of 21, Hi-Tech Pipes trades at FY2024 P/E of 46, JTL Industries trades at FY2024 P/E of 25, Rama Steel Tubes trades at FY2024 P/E of 63 and Surya Roshni trades at FY2024 P/E of 22

For FY2024, Sambhv Steel Tubes Ebitda margin and ROE stood at 12.4% and 25.4% compared to 6.6% and 22.2% for APL Apollo Tubes respectively, 12% and 13.5% for Hariom Pipes Industries, 4.3% and 8.8% for Hi-Tech Pipes, 7.5% and 19.1% for JTL Industries, 5.7% and 10.3% for Rama Steel Tubes and 7.3% and 16.3% for Surya Roshni