Raipur-Based Steel Producer, Samarth Steel Tubes Limited, Has Launched Its Initial Public Offering (IPO) on June 25, 2025
The IPO, valued at ₹540 crore, is open for applications until June 27. This marks a significant step for the company as it seeks to attract investors in the burgeoning Indian steel industry.
This article delves into Samarth Steel Tubes Limited, exploring its operations, financial performance, and whether the IPO represents a worthwhile investment.
Company Overview and Operations
Samarth Steel Tubes is a mid-sized steel pipe manufacturer specializing in the production of mild steel and stainless steel pipes and tubes. Established in 2018, the company has rapidly gained a foothold in the market. A key aspect of its operations is a vertically integrated model, meaning it manufactures the raw materials – such as sponge iron, slabs, blooms, and coils – required for its production processes itself.
This integrated approach provides Samarth Steel with several advantages, including control over production costs, consistent quality, and timely supply chains. The company’s primary products include black pipes, GI pipes, GP pipes, hollow sections, Corten steel pipes, and CRFH pipes.
IPO Size and Objectives
Through this IPO, the company aims to raise a total of ₹540 crore. This includes ₹440 crore in fresh equity shares, while ₹100 crore will be raised through an Offer for Sale (OFS) by existing investors. The capital raised will primarily be used to repay debt and for general corporate purposes.
As of March 2024, the company’s total debt stood at approximately ₹619 crore, a figure it intends to reduce to improve its balance sheet.
IPO Price Band and Investment Terms
The price band for this IPO has been set between ₹77 and ₹82 per share. Investors interested in participating must apply for a minimum lot size of 182 shares. At the upper price band, an investor would require a minimum investment of ₹14,924.
The IPO is scheduled to list its shares on both the NSE and BSE on July 2, following the completion of the subscription process.
Grey Market Signals
In the grey market, Samarth Steel’s IPO has been trading with a premium of approximately ₹5 per share. This represents a gain of roughly 6% over the IPO’s price band. While this premium isn’t exceptionally high, it indicates market interest in the IPO.
Company Financial Performance
Here’s a summary of the company’s financial performance for the fiscal year 2024:
- Total Revenue: ₹1,285.76 crore
- Revenue Growth: 37% increase compared to the previous year
- Net Profit (PAT): ₹82.44 crore
- EBITDA Margin: 12.40%
- Net Worth: ₹438.28 crore
- Total Debt: ₹619.14 crore
These figures demonstrate a growth in both revenue and profit, however, the company’s debt levels have also increased. The IPO proceeds are expected to be used to reduce this debt, potentially leading to improved profitability in the future.
Brokerage House Recommendations
Several brokerage houses have issued positive recommendations regarding this IPO:
- BP Wealth has recommended a ‘subscribe’ rating, citing the company’s cost control measures and vertical integration as competitive advantages.
- Ventura Securities also believes that the company’s dealer and distributor network, spanning 15 states and a union territory, provides a b foundation.
- Furthermore, the company is reportedly planning to expand its production of stainless steel products, which could contribute to future revenue growth.
