"Scoda Tubes IPO Opens to Strong Demand: Smart Buy or Risky Bet?"

Scoda Tubes, a stainless-steel tube and pipe manufacturer, launched its ₹220 crore initial public offering (IPO) on May 28, 2025. The IPO was fully subscribed on the first day, driven by strong interest from Qualified Institutional Buyers (QIBs) . This early success indicates positive market sentiment towards the company.

IPO Snapshot

Issue Size: ₹220 crore (entirely fresh issue)

Price Band: ₹130–₹140 per share

Lot Size: 100 shares (minimum investment of ₹13,000)

Subscription Period: May 28–30, 2025

Allotment Date: June 2, 2025

Listing Date: June 4, 2025 (BSE and NSE)

Retail Allocation: 35%

Company Overview

Scoda Tubes specializes in manufacturing seamless and welded stainless-steel tubes and pipes, including instrumentation tubes and “U” tubes. With over 14 years of industry experience, the company operates a fully integrated manufacturing facility in Gujarat, equipped with advanced machinery such as pilger mills and annealing furnaces . Its products cater to various sectors, including oil & gas, chemicals, power, pharmaceuticals, and transportation.

Financial Highlights

Revenue Growth: ₹307.79 crore in FY23 to ₹402.49 crore in FY24

Profit After Tax (PAT): 15x increase over the past three years

Return on Capital Employed (ROCE): 15.92%

Return on Equity (ROE): 28.77%

Earnings Per Share (EPS): ₹8.10

Price-to-Earnings (P/E) Ratio: 17.26x

⚖️ Should You Apply or Avoid?

✅ Reasons to Consider Applying:

Strong initial subscription, indicating investor confidence.

Robust financial performance with significant revenue and profit growth.

Fair valuation metrics compared to industry peers.

Positive outlook for the stainless-steel industry, driven by infrastructure and industrial demand.

❌ Reasons to Exercise Caution:

Increasing debtor days (from 62 in FY23 to 82 in FY24) and a declining current ratio (from 1.22 in FY22 to 1.09 in FY24), indicating potential liquidity concerns .

Moderate Grey Market Premium (GMP) suggesting limited listing gains.

Potential risks associated with market volatility and sector-specific challenges.

Final Verdict

Scoda Tubes presents a compelling investment opportunity for those seeking exposure to the stainless-steel manufacturing sector. The company's strong financials and market position are promising. However, potential investors should weigh the financial concerns highlighted and consider their risk tolerance. Consulting with a financial advisor is recommended to make an informed decision.