Sambhv Steel Tubes IPO Day 1: Sees tepid response at 0.46x subscription

Sambhv Steel Tubes’ issue, priced between ₹77-82 per share, attracted bids for 2.25 crore shares against the total offering of 4.92 crore shares.

Sambhv Steel Tubes Limited’s ₹540 crore initial public offering (IPO) received a lukewarm response on its opening day, garnering overall subscription of 0.46 times by 2.57 PM on June 25, 2025. The steel pipe manufacturer’s issue, priced between ₹77-82 per share, attracted bids for 2.25 crore shares against the total offering of 4.92 crore shares.

The retail investor segment showed the strongest interest with 0.44 times subscription, while qualified institutional buyers (QIBs) subscribed to 0.60 times their allocated portion. Non-institutional investors remained cautious with only 0.32 times subscription. The employee reservation category attracted 0.34 times subscription.

The Chhattisgarh-based company, which manufactures electric resistance welded (ERW) steel pipes and structural tubes, is raising funds through a combination of fresh issue worth ₹440 crore and offer for sale (OFS) of ₹100 crore. The fresh issue proceeds will primarily be used for prepayment of outstanding borrowings worth ₹390 crore, with the remainder allocated for general corporate purposes.

Choice Broking has assigned a “Subscribe for Long Term” rating to the issue, despite noting that the company appears “fully priced” at the upper price band. The brokerage highlighted SSTL’s backward integration capabilities and positioned it as one of only two players in India manufacturing ERW steel pipes using narrow-width hot rolled coils.

The company reported revenue of ₹1,286 crore and net profit of ₹82 crore in FY24, with a three-year revenue growth rate of 25.3 per cent. At the higher price band, SSTL is demanding a valuation of 29.3 times FY24 earnings and 2.4 times enterprise value to sales ratio.

SSTL operates manufacturing facilities in Chhattisgarh with total installed capacity of 1.54 million tonnes per annum as of FY25. The company has established a distribution network of 37 distributors across 15 states, serving over 700 dealers nationwide.

Post-IPO, promoter shareholding will reduce from 71.93 per cent to 56.14 per cent, while public shareholding will increase to 43.86 per cent. The issue closes on June 27, 2025, with listing expected on July 2, 2025.