Is Scoda Tubes IPO Good or Bad – Detailed Review

Scoda Tubes Limited IPO is kicking off its initial public offering, which will be open from May 28, 2025, to May 30, 2025. While considering applying for this IPO, certain questions may arise in your mind, including whether the Scoda Tubes IPO is good or bad, whether it is worth investing in this IPO, and so on. 

This article offers a comprehensive Scoda Tubes IPO review, covering its business operations and fundamental analysis to help you make an informed investment choice.

Scoda Tubes IPO Review

Scoda Tubes is gearing up for its Initial Public Offering (IPO), aiming to raise Rs 220 crore. The proceeds are primarily earmarked for expanding production capacity of seamless and welded tubes and pipes, as well as to fund the part incremental working capital of the company.

After reviewing the financials for the last three fiscal years, it’s clear that the company has shown strong and consistent growth of about 57% and 31% over the past two years, which reflects a solid upward trend. Additionally, on the profitable side, the company has done really well as the EBITDA grew sharply and the PAT improved significantly. What really stands out are the return ratios as the numbers indicate that the company is using its capital more effectively now and is delivering stronger returns to shareholders.

With revenue of around ?400 crore, it’s much smaller than big names like Ratnamani and Venus Pipes, which are clocking in over ?5,000 crore and ?800 crore, respectively. But for its size, Scoda’s performance looks quite decent. Its EPS of ?4.60 is decent, especially when compared to Welspun, and its Return on Net Worth (RoNW) stands out at 28.77%, which is better than most peers. While its NAV per share is lower at Rs 15.99, reflecting its smaller scale, the company is using capital efficiently. With a P/E of 30.43, the IPO seems fairly priced, making Scoda Tubes a promising growth opportunity in the stainless-steel segment.

That said, potential investors are strongly advised to conduct their own independent analysis and consult financial advisors before making any investment decision. Keep reading to find out more about the company’s background, business model, and growth strategy.

Company Overview of Scoda Tubes IPO

Scoda Tubes Limited is a well-established Indian manufacturer of stainless-steel tubes and pipes, with over 14 years of industry experience. The company specializes in two main categories of products: seamless and welded tubes/pipes. These products are further divided into five key product lines, including stainless steel seamless pipes, seamless tubes, seamless “U” tubes, instrumentation tubes, and welded tubes and “U” tubes. 

All products are marketed under the “Scoda Tubes Limited” brand and are widely used by a diverse customer base, including engineering firms, EPC contractors, and industrial companies across sectors such as oil and gas, chemicals, fertilizers, power, pharmaceuticals, automotive, railways, and transportation. 

The company serves both domestic and international markets supplying stockists and industrial clients within India and exporting to countries including the United States, Italy, Germany, Austria, and several Eastern European nations.

To support its seamless tube production, Scoda Tubes also operates a hot piercing mill that produces mother hollow (an essential raw material for its seamless products). In addition to its core manufacturing operations, the company generates revenue by offering job work services such as annealing, straightening, pickling, and marking to other customers.

Scoda Tubes sources its basic raw materials, stainless steel round bars for seamless products and stainless steel coils for welded products, from domestic steel manufacturers, suppliers, and stockists, depending on availability, pricing, and quality. The company’s sole manufacturing facility is strategically located on the Ahmedabad-Mehsana Highway, and this location provides excellent logistical advantages. The facility also includes dedicated storage space for raw materials and finished goods.

The company serves both domestic and international markets. In India, it supplies products to stockists and industrial clients in the oil and gas, chemicals, fertilisers, power, pharmaceuticals, automotive, railways, and transportation sectors. Internationally, Scoda Tubes exports its products to stockists in countries such as the United States, Italy, Germany, Austria, and several Eastern European nations.

Industry Overview of Scoda Tubes IPO 

The global demand for stainless steel tubes and pipes has shown steady growth over recent years, increasing from approximately 2.7 million tonnes per annum in 2019 to about 3.1 million tonnes in 2023. This represents a compound annual growth rate (CAGR) of around 3%. Within this demand, stainless steel welded tubes and pipes continue to dominate, accounting for roughly 80–85% of global consumption, while seamless varieties make up the remaining 15–20%.

In India, the domestic market has experienced even more robust growth. Demand rose from 0.23 million tonnes in fiscal 2020 to 0.32 million tonnes by fiscal 2024, marking a CAGR of nearly 9%. Throughout this period, welded tubes and pipes have maintained a steady share of about 65% in the domestic market, with seamless tubes and pipes contributing the remaining 35%.

Looking ahead, the domestic demand is expected to continue its upward trend. Between fiscals 2024 and 2029, consumption of stainless steel tubes and pipes in India is projected to grow at a CAGR of 6–8%, reaching approximately 0.45–0.47 million tonnes by fiscal 2029. This growth will be driven by increased activity in key end-use industries such as building and construction, automotive, oil and gas, chemical manufacturing, and food and beverage processing, all of which rely heavily on stainless steel tubing solutions.

Financial Overview of Scoda Tubes IPO

The financial performance of the company over the three fiscal years ending March 31, 2022, 2023, and 2024 reflects a strong growth trajectory and improved operational efficiency. The revenue from operations has consistently increased from Rs 194.03 crore in FY 2022 to Rs 305.03 crore in FY 2023, and further to Rs 399.86 crore in FY 2024. This represents a year-on-year growth of approximately 57.2% and 31.1%, respectively. 

The company’s profitability has also seen a significant upward trend. EBITDA rose from Rs 9.99 crore in FY 2022 to Rs 34.78 crore in FY 2023, and then to Rs 58.79 crore in FY 2024. This sharp rise reflects operational efficiency and scale. The EBITDA margin also improved significantly, from 5.15% in FY2022 to 11.40% in FY2023, and to 14.70% in FY2024. 

Profit After Tax (PAT) increased from Rs 1.64 crore in FY2022 to Rs 10.34 crore in FY2023 and then to Rs 18.30 crore in FY2024. This consistent improvement reflects not only better operating performance but also controlled total and tax expenses. The PAT margin has climbed from 0.84% in FY2022 to 3.39% in FY2023 and to 4.58% in FY2024, indicating improved bottom-line profitability.

Return ratios present a compelling picture of value creation. Return on Equity (RoE) jumped from 4.68% in FY 2022 to 22.81% in FY 2023 and further to 28.77% in FY 2024. Similarly, Return on Capital Employed (RoCE) improved from 5.84% in FY 2022 to 12.62% in FY 2023 and stood at 15.92% in FY 2024. These improvements suggest that the company is deploying both equity and overall capital more efficiently, resulting in higher returns for investors.

Strengths and Risks of Scoda Tubes IPO

Let’s dive into the strengths and weaknesses to assess if the Scoda Tubes IPO is good or bad for investors.
Strengths 

• Stainless steel focus:
  Scoda Tubes specializes exclusively in stainless steel seamless and welded tubes and pipes, enabling them to build deep expertise in production, customization, and customer service, helping them meet specific requirements in length, thickness, and grade with high precision.

• Strong financial growth:
  The company’s revenue grew from Rs 194.028 crore in FY22 to Rs 399.861 crore in FY24 (CAGR 27.26%), while PAT rose sharply from Rs 1.636 crore to Rs 18.3 crore (CAGR 123.64%), reflecting robust demand and operational efficiency.

• Global accreditations:
  They hold key international certifications like ISO, PED, AD 2000, IBR, and DNV, enabling them to meet global quality standards and serve diverse sectors across domestic and international markets.

• Diverse customer base:
  They serve a wide range of industries across domestic and global markets, with exclusive stockists in India and the U.S. ensuring strong market presence and distribution.

• Strategic and integrated facility:
  Their plant near key export hubs supports efficient logistics, while their in-house hot piercing mill enables backward integration, cost efficiency, and flexibility to meet diverse customer demands.
  

Risks

• Customer concentration risk:
  A significant portion of the company’s revenue comes from our top 10 customers, with the largest alone contributing 18.50%. Additionally, they operate on purchase orders without long-term contracts, which could adversely affect the financial performance.

• Welded pipes capex risk:
  Planned capacity expansion despite underutilized existing capacity (1,020 MTPA) may not yield proportional revenue growth, potentially affecting financial performance.

• High working capital needs:
  Long production cycles and extended credit terms (56 days to customers vs. 48 days from suppliers) lead to prolonged cash conversion cycles, requiring significant working capital and impacting financial flexibility.

• Single manufacturing unit risk:
  The company’s entire production depends on one facility in Mehsana, Gujarat. Any disruptions, like technical failures, natural disasters, or regional issues could halt operations and severely impact their business and financial health.

• Exchange rate risk:
  With around 20-30% of revenue from exports mostly in USD and Euro, fluctuations in exchange rates can impact their sales, costs, and financial results reported in Indian Rupees.

• Market and price volatility:
  Demand and pricing in stainless-steel tubes and pipes are highly volatile, influenced by raw material costs, industry cycles, and economic conditions, which can materially impact the business and financial performance.

Strategies of Scoda Tubes IPO

• Capacity expansion:
  The Scoda Tubes are expanding production capacity by acquiring land and machinery, supported by India’s anti-dumping and anti-subsidy duties on steel imports that boost domestic stainless-steel tube manufacturers’ growth and margins.

• Expanding global customer reach:
  The company exports to 16 countries, with key markets in the US, Europe, and plans to enter the Middle East. Exports accounted for up to 30.84% of revenue in recent years, reinforcing our position as a quality international brand.

• Enhanced brand visibility:
  They aim to strengthen the “Scoda” brand through continued participation in key global and domestic trade expos, improved customer service, and expanded marketing efforts, including digital outreach.

Scoda Tubes IPO Vs Peers

Source: RHP of the company

With a revenue of Rs 399.861 crore, the company is significantly smaller than industry leaders such as Ratnamani Metals & Tubes and Venus Pipes & Tubes, which reported revenues of Rs 5059.090 crore and Rs 802.198 crore, respectively.  In terms of profitability, Scoda Tubes reported a EPS of Rs 4.60, which is moderate compared to the EPS of larger peers like Ratnamani (Rs 89.18) and Venus Pipes (Rs 42.36). Meanwhile, Welspun Specialty Solutions, despite its higher revenue base, has a significantly lower EPS of Rs 1.18, indicating that Scoda has managed to provide earnings to its shareholders. 

What particularly stands out for Scoda Tubes is its Return on Net Worth (RoNW), which at 28.77%, surpasses all listed peers except Welspun (67.11%). Ratnamani and Venus, while being larger in size, reported RoNW figures of 19.90% and 21.17% respectively, while Suraj Limited stood at 17.57%. This suggests that Scoda Tubes is delivering an impressive return on shareholders’ equity, which indicates strong internal efficiency and capital management.

Objectives of Scoda Tubes IPO 

The issue by the IPO will be used by the company for the following purposes:

• Capital expenditure towards expanding production capacity of seamless and welded tubes and pipes

• Funding the part incremental working capital requirements of our Company

• General corporate purposes.

Scoda Tubes IPO Details

IPO Dates

Scoda Tubes IPO will be open for subscription from May 28, 2025, to May 30, 2025. The allotment of shares to investors will take place on June 2, 2025, and the company will be listed on the NSE and BSE on June 4, 2025.

IPO Issue Price

Scoda Tubes is offering its shares in the price band of Rs 130 to Rs 140 per share. This means you would require an investment of Rs. 14,000 per lot (100 shares) if you are bidding for the IPO at the upper price band.

IPO Size

Scoda Tubes is issuing a total of 1,57,14,286 shares, which are worth Rs 220 crores. From the total issue, a total of 1,57,14,286 shares worth Rs 220 crores are completely through fresh issue only.

IPO Allotment Status

Investors who applied for the IPO can check their IPO allotment status on June 2, 2025, through the registrar's website: MUFG Intime India Private Limited, BSE, NSE, or their stockbroker platform.

IPO Listing Date

The shares of Scoda Tubes will be listed on the NSE and BSE on June 4, 2025.

IPO Application Link

Open demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free.

Apply for Scoda Tubes IPO