Subscribe for Sambhav Steel Tubes Ltd IPO; Choice Equity Broking

Choice Equity Broking, has come out with its report on Sambhav Steel Tubes Ltd. The research firm has recommended to “ Subscribe” the ipo in its research report as on June 24, 2025.

Broker Research

June 25, 2025 / 11:59 IST

IPO

Choice Equity Broking, Sambhav Steel Tubes Ltd

Sambhv Steel Tubes Ltd. (SSTL), the backward-integrated manufacturers of electric resistance welded (“ERW”) steel pipes and structural tubes (hollow section), is coming up with an IPO to raise around Rs. 540.0cr, which opens on 25th Jun and closes on 27th Jun 2025. The price band is Rs. 77 - 82 per share. This public issue is a combination of fresh issue (Rs. 440.0cr) and OFS (Rs. 100.0cr). From the fresh issue net proceeds, the company will be utilizing Rs. 390.0cr for Pre-payment or scheduled re-payment of a portion of certain outstanding borrowings availed by the company. Residual proceeds will be used for general corporate purposes. Some of the promoter & promoter group (P&PG) entities are participating in the OFS and offloading 0.793cr equity shares. Post-IPO, the P&PG and public shareholders will have 56.14% and 43.86% stake in the company, respectively.

Valuation and Outlook

At a higher price band the company is demanding a valuation of a P/E of 29.3x (based on FY24 EPS of Rs. 2.8) and EV/Sales of 2.4x, this valuation seems to be fully priced compared to its peer average. Annualizing 9MFY25 earnings (EPS of ₹1.8), the implied P/E rises to 44.5x, reflecting a temporary decline in profitability due to ongoing facility expansions. Backed by fully integrated operations and inhouse manufacturing capabilities, the company is well-positioned to capitalize on this sectoral growth. While there may be short-term pressure on margins, the company’s ongoing expansion and favorable industry dynamics point to strong long-term growth potential. Therefore, we recommend a “Subscribe for Long Term” rating for issue.

For all IPO report, click here