Sambhv Steel Tubes Limited – A Rising Challenger In Indian Steel Tubes

25 Jun 2025 , 10:15 AM

Sambhv Steel Tubes Limited is an emerging manufacturer of steel pipes and tubes. It specialises in ERW (Electrical Resistance Welded) and other structural steel products used across a diverse range of industries.

The industry is competitive with many large players in the market. However, despite the smaller size, its return metrics are healthy and worthy of note.

Its IPO of upto INR  5,400.00 million comprises of both a fresh issue and offer for sale from its existing shareholders/promoters.

Offer Details of the IPO

• Fresh Issue: Up to INR 4,400.00 million
• Offer for Sale: Up to INR 1,000.00 million

Details of Selling Shareholders

1. Shashank Goyal*: Up to INR 00 million
2. Rohit Goyal*: Up to INR 00 million
3. Kaushlya Goyal*: Up to INR 00 million
4. Harsheet Goyal*: Up to INR 00 million
5. Rinku Goyal: Up to INR 00 million

* – Promoter/Founder

• Price Band: Rs. 77 to Rs. 82 per Equity Share

Objectives Of The IPO

The key objective of the IPO is to utilize the net proceeds towards reducing its debt and utilize the remaining funds for general corporate purposes.

De-leveraging/Repayment of Debt

• Pre-payment or scheduled re-payment of a portion of certain outstanding borrowings availed by the company: INR 3,900.00 million
• As of April 30, 2025, the total outstanding borrowings of the company are INR 5,545.85 million, comprising INR 5,490.58 million of fund-based borrowings and INR 55.27 million of non-fund borrowings.

Industry Overview – Steel Pipes & Tubes

The steel pipe and tubes industry traces its origins to the mid-19th century, when steel was first manufactured using the the Bessemer process. Since then, the industry has undergone dramatic transformation over the years due to technological development, market needs, and the birth of new manufacturing methods.

Evolution of the Industry

The steel pipes market has evolved significantly over the centuries. In the beginning, steel pipes were used primary for in water supply and sewage systems. When the oil & gas industry started to expand, the use of steel pipes increased. New applications were developed and competition amongst players intensified.

The 20th century became know as the century where the industry introduced innovative manufacturing processes like electric resistance welding and submerged arc welding. These operations made it possible to turn out high-quality steel tubes possessing high strength and excellent durability..

Customers and Market Segments

The steel pipes and tubes industry serves a diverse range of customers across various sectors, including:

• Oil and Gas:Steel pipes are used for the transportation of oil and gas from production sites to refineries and end users.
• Water Supply and Sewage: Water and sewage systems in urban and rural areas utilize steel pipes.
• Construction: Steel pipes are used in the building construction. HVAC systems, plumbing, fire protection systems – all use steel pipes.
• Automotive: Pipes are used for making different parts in an automobile such as exhaust systems, fuel lines, brake lines etc.
• Industrial: Steel pipes are also used in a variety of industrial applications including but not limited to chemical and processing, food processing, power etc.

The industry can be broadly segmented into two categories/

• Welded Pipes: This segment can be further broken down into ERW and SAW pipes, which are used for the transportation of oil, gas, and water.
• Seamless Pipes: Seamless pipes are manufactured as a continuous coil without a seam or a weld. These are used for high-pressure applications, including oil and gas exploration and production.

Market Size & Growth

The steel pipes and tubes industry is an important sector in the global economy, with a substantial market size and growth potential. China is the leading producer and accounts for 60% of worldwide market. India is a distant 3^rd and accounts for 5% of the global market. Out of a total global volume of 131.9 mt in 2022, India accounted for 6.9 mt.

Segment Size and Growth

The steel pipes and tubes market can be broadly classified into two segments – Welded and Seamless. In 2022, welded pipes and tubes accounted for approximately 67% of all tubular pipes produced worldwide, while seamless pipes and tubes accounted for around 33%.

The welded pipes and tubes subsegment witnessed a growth of 1% between 2017 and 2022, driven by increasing demand from the building and construction and infrastructure sectors. The seamless pipes and tubes subsegment is expected to grow at a CAGR of 4% between 2017 and 2022, driven by increasing demand from the oil and gas industry.

Key Driving Factors

The growth of the steel pipes and tubes industry is driven by several key factors, including:

• Growing demand from end-use industries: Demand for steel pipes and tubes is anticipated to be driven by the construction, infrastructure, and oil and gas industries over the next few years.
• Government development programs and investments: Governments across the world are focused on various infrastructure development projects, which is likely to boost the demand for steel pipes and tubes.
• Urbanization and industrialization: Growing urbanization and industrialization in developing economies are projected to boost the demand for steel pipes and tubes.
• Technological progress: Advances in technology are expected to improve the efficiency and productivity of steel pipes and tubes manufacturers, making them more competitive in the global market.

SAMBHV Steel Tubes Limited – Company Overview

Sambhv Steel Tubes Limited, formerly known as Sambhv Sponge Power Private Limited, was incorporated on April 24, 2017, as a private limited company under the Companies Act, 2013. The company started with manufacturing of sponge iron and today is a merchant producer of value-added, tailor-made pipe and tube products.

Business Segments

The firm is involved in the steel business focusing on electric resistance welded (ERW) steel pipes and tubes. It offers the following products:

• ERW black pipes and tubes
• Galvanized iron (GI) pipes
• Pre-galvanized (GP) pipes
• GP coils
• Stainless steel HRAP coils
• Stainless steel CR coils
• Cold rolled full hard (CRFH) pipes
• Steel door frames

Manufacturing Facilities

The company operates two plants situated in Raipur, Chhattisgarh, having a combined installed capacity for finished products of 1,698,000 metric tons per annum (MTPA) as on March 31, 2025. The plants have advanced technology and production facilities, which include an effluent treatment plant, a water treatment plant, and an in-house power plant that operates on flue gases used to produce DRI directly.

End use industries:

Its products are used in the following industries:

• Construction
• Infrastructure
• Water transportation
• Agriculture
• Automobile
• Telecommunications
• Oil and gas
• Fire-fighting systems
• Irrigation systems
• Plumbing systems

 

Expansion Plans

The company is looking to further diversify into other product ranges to further grow its product basket and also to increase the installed capacity to cater to the increasing demand of steel pipes and tubes in India. It also intends to penetrate new markets, including overseas markets, to increase its revenue sources and enhance its profit.

Competitive Landscape

The company operates in a highly competitive steel pipes and tubes industry, with several domestic and international players vying for market share. The major competitors in the industry include:

• APL Apollo Tubes
• Hariom Pipe Industries
• Hi-Tech Pipes
• Rama Steel Tubes
• Surya Roshni
• JTL Industries

Competitor Analysis

• APL Apollo Tubes: APL Apollo Tubes is the largest producer of electric resistance welded tubes in India and one of the largest manufacturers of steel pipes in India. Its portfolio includes ERW tubes, seamless tubes, and GI pipes, among other products. However, APL Apollo Tubes has a higher debt-to-equity ratio, potentially affecting its financial flexibility.
• Hariom Pipe Industries: Hariom Pipe Industries is well-known for providing high-quality steel pipes and tubes. With a strong distribution network, the company offers products such as ERW pipes, seamless pipes, and GI pipes. However, Hariom Pipe Industries has a lower market share.
• Hi-Tech Pipes: Hi-Tech Pipes is one of the leading manufacturers of steel pipes and tubes in India, with a capacity to produce 800,000 MT of high-quality products. The company offers various products, including ERW pipes, seamless pipes, and GI pipes. However, its costing is slightly higher than our company, which may impact its profitability.

Competitive Advantages:

• Vertical Integration: The company’s integrated steel plant has a capacity of 1.5 MT, manufacturing sponge iron, blooms/slabs, HR coils, and pipes and tubes. This combined facility gives an advantage of managing the entire production process and guaranteeing quality products at the lowest possible rates.

Unique backward integration process enables the company to produce various finished products such as ERW Pipes and Tubes, Pre-galvanized pipes, GI Pipes from intermediate products like sponge iron, blooms/slabs, and HR Coils. This vertically integrated structure of the company allows it to manage the supply chain from end to end, leading to less reliance on outside coil producers and the ability to deliver quality product quicker to market.

• Narrow-width HR coil manufacturing capabilities: Sambhv Steel has Narrow-width HR coil manufacturing capabilities with comparable quality and lower cost compared to leading manufacturers. This offers saving in Capex & cost during Pipe making process.
• Diverse product mix: The company offers a diverse range of products such as ERW black pipes and tubes, GI pipes, GP coils, GP pipes, CR coils and stainless steel products with diverse end market like construction, infrastructure and automotive.
• Strong distribution network: The company has a strong distribution network across India, offering a complete range of products, including ERW pipes, seamless pipes, and GI pipes. This network enables it to access a diverse range of customers.
• Locational Advantage: Sambhav Steel is situated in Raipur, Chhattisgarh which is the heart of India with a twin advantage of the logistic support and proximity to the iron ore and coal fields. The closeness of the company to the most important sources of raw materials, like iron ore and coal, lowers the transportation prices and guarantees the stability of the supply chain.
  1. Long term availability of high grade iron ore: The company sources iron ore from mines of a Navratna PSU mining company known for highest grade of iron ore available in India.
  2. Long-term coal supply agreement: The company has a long-term coal supply agreement with a Maharatna PSU, ensuring consistent and uninterrupted supply of coal.

• Innovative products: The company is focused on creating a large variety of products, including ERW pipes, seamless pipes, and GI pipes. R&D team continuously develops new products and upgrades existing ones.

Challenges:

·         Dependence on Raw Material Prices: Sambhv Steels’ profitability remains sensitive to raw material prices like iron ore and coal. If the price of raw materials rises sharply, its profitability and margins may be affected.

1. Price volatility exposure: The company is vulnerable to raw material price volatility which would impact profitability.
2. Uneven Raw Material Price: Sambhv Steel has limited control on raw material price which are affected by global market dynamics and government policies.

Financial Performance

Revenue Growth: A Steady growth
The company’s revenue has shown a steady increase over the past three years. The growth in revenue is primarily driven by the company’s ability to increase its sales volume, particularly in the ERW black pipes and tubes segment. The company’s strategic location in Chhattisgarh, close to its key raw material suppliers, has also contributed to its revenue growth. Additionally, the company’s focus on product customization has enabled it to increase its wallet share and diversify its product basket.

Profit Growth: A Mixed Bag
While the company’s revenue has shown a steady increase, its EBITDA margin profile has deteriorated. From a 15.2% EBITDA margins in FY22, it witnessed only 12.4% EBITDA margins in FY24. In 9m FY25, they further eroded to 10.5%.

Working Capital: Increased in 9m FY25
The company’s working capital days had increased in the period ending Dec 31, 2024. Against a working capital days of 41 during FY24, they had increased to 58 in the period mentioned. However, the company’s management is confident that it can manage its working capital effectively and reduce its working capital cycle in the near future.

Figure: Financial Summary

Metric (INR m)	Period Ending March 31, 2022	Period Ending March 31, 2023	Period Ending March 31, 2024	Period Ending December 31, 2024
Revenue from Operations	8,193.49	9,372.20	12,857.57	10,160.92
EBITDA	1,245.15	1,173.00	1,598.72	1,063.67
PAT	721.08	603.83	824.39	406.85

Source: RHP

Figure: Peer Comparison

Company Name	Revenue from Operations (INR million)	P/E as on June 2, 2025	EPS Diluted (INR)	RoNW (%)	Net Asset Value (INR per share)	NAV (INR million)
Sambhv Steel Tubes Limited	12,857.57	21.6*	3.79	25.42	18.19	4,382.82
APL Apollo Tubes Limited	181,188.00	68.52	26.40	22.21	129.60	35,966.20
Hariom Pipes Industries Limited	11,531.88	21.15	18.34	13.56	160.50	4,188.00
Hi-Tech Pipes Limited	26,992.93	35.52	2.69	8.90	38.20	5,725.22
JTL Industries Limited	20,402.29	10.16	6.52	19.15	43.72	7,739.10
Rama Steel Tubes Limited	10,465.10	24.27	0.49	10.40	2.14	3,308.10
Surya Roshni Limited	78,092.70	10.98	30.25	17.41	187.60	20,417.00

Source: RHP; * – based on upper end of price band