The Scoda Tubes IPO has burst onto the Indian stock market, generating buzz with its ₹220 crore fresh issue that closed on May 30, 2025. This initial public offering from Scoda Tubes Limited, a Gujarat-based manufacturer of stainless-steel tubes and pipes, has drawn significant investor interest, evidenced by a stellar subscription rate of over 29 times by the second day. With a price band of ₹130 to ₹140 per share and a listing set for June 4 on the BSE and NSE, the IPO’s momentum is undeniable. However, as with any investment, potential risks warrant careful consideration. Let’s explore the latest developments, opportunities, and factors investors should weigh before diving in.
Unpacking the Scoda Tubes IPO Momentum
Scoda Tubes Limited, founded in 2008, has carved a niche in producing seamless and welded stainless-steel tubes, serving industries like oil and gas, chemicals, power, and pharmaceuticals. The Scoda Tubes IPO, a book-built issue of 1.57 crore shares, aims to fuel the company’s growth by expanding production capacity and addressing working capital needs. By May 29, the IPO was subscribed 29.20 times, with non-institutional investors (NIIs) leading at 21.77x, retail at 6.99x, and qualified institutional buyers (QIBs) at 2.08x. This surge reflects strong market confidence, bolstered by a grey market premium (GMP) of ₹24, hinting at a listing price around ₹164—a potential 17% gain over the upper price band.
The company’s financials add to the appeal. Scoda Tubes reported a revenue of ₹402.49 crore in FY24, up from ₹307.79 crore in FY23, with profits rising from ₹10.34 crore to ₹18.3 crore. For the nine months ending December 2024, it posted a net profit of ₹24.91 crore on ₹363.48 crore in revenue. These figures showcase robust growth, with a revenue CAGR of 43.6% from FY22 to FY24 and an EBITDA margin improving from 5.1% to 14.7%.
Scoda Tubes IPO: Key Details at a Glance
To make sense of the Scoda Tubes IPO, here’s a concise overview of its structure:
- Issue Size: ₹220 crore, entirely a fresh issue of 1.57 crore shares.
- Price Band: ₹130–₹140 per share (face value ₹10).
- Lot Size: Minimum 100 shares (₹13,000–₹14,000 for retail investors).
- Allocation: 50% QIB, 35% retail, 15% NII.
- Key Dates: Opened May 28, closed May 30, allotment finalized June 2, listing June 4.
- Use of Proceeds: ₹104.98 crore for capacity expansion, ₹110 crore for working capital, remainder for general corporate purposes.
- Lead Manager: Monarch Networth Capital; Registrar: MUFG Intime India (Link Intime).
The company raised ₹65.99 crore from anchor investors like Malabar India Fund and MNCL Capital on May 27, allocating 47.14 lakh shares at ₹140 each, signaling strong institutional backing.
Opportunities and Strengths of Scoda Tubes
Scoda Tubes’ appeal lies in its operational strengths. Its manufacturing facility on the Ahmedabad-Mehsana Highway features a hot piercing mill, enabling backward integration by producing mother hollows in-house. This reduces reliance on third-party suppliers and boosts cost efficiency. The company serves over 230 customers across 11 countries, with exports contributing 28–30% of revenue in recent years. Its product portfolio—spanning seamless pipes, U-tubes, and instrumentation tubes—caters to high-demand sectors, supported by certifications like ISO 9001:2015 and PED 2014/68/EU.
Brokerages like Canara Bank Securities and BP Equities have given “subscribe” ratings, citing Scoda’s technical expertise, export growth, and a P/E ratio of 17.3x based on FY25 earnings, which is competitive compared to peers like Ratnamani Metals (37x P/E). The company’s focus on high-margin seamless products and planned capacity expansion (10,000 tonnes for seamless, 12,130 tonnes for welded) positions it to capitalize on industrial demand.
Risks to Consider with the Scoda Tubes IPO
Despite its promise, the Scoda Tubes IPO carries risks. Cash flow efficiency is a concern, with only ₹2.26 crore generated from operations in FY24 despite strong revenue growth. The company’s working capital cycle, at 153 days, indicates cash tied up in inventory and receivables, potentially straining liquidity. Additionally, Scoda relies heavily on select stockists for sales, posing a concentration risk. Its welded pipe segment, targeted for expansion, has low current utilization and untested market performance, which could impact profitability.
Valuation is another point of debate. At a P/E of 30.43x based on FY24 earnings, the IPO is priced in line with industry averages (30.97x), but some analysts argue it’s fully valued. Posts on social media platforms suggest caution, with some labeling it a “pass” for short-term listing gains due to high debt and modest GMP. Long-term investors, however, may find value in Scoda’s growth trajectory.
Navigating the Decision to Invest
The Scoda Tubes IPO offers a compelling mix of growth potential and sector tailwinds, but it’s not without hurdles. Its strong subscription, export reach, and financial growth make it attractive for long-term investors. However, cash flow concerns, customer concentration, and an untested welded segment call for prudence. The GMP suggests a decent listing pop, but short-term gains are uncertain in a volatile market. Investors should assess their risk appetite and consult financial advisors to align this opportunity with their goals.
Disclaimer: This blog is for informational purposes only and does not constitute investment advice. The securities discussed are not recommendations. Investing in IPOs involves risks, including market volatility and potential loss of capital. Always consult a qualified financial advisor before making investment decisions.
Curious about the Scoda Tubes IPO? Check your allotment status on the BSE or Link Intime website and consult a financial advisor to see if this IPO aligns with your investment strategy. Act before the June 4 listing to seize this opportunity!