Scoda Tubes IPO - Price Band, Issue Details, Financials, Peer Comparison, Risks - Read Anand Rathi's Analysis

Ahmedabad-based manufacturer and marketing of stainless-steel tubes and pipes Scoda Tubes' Rs 220 crore IPO opened on May 28 for subscription and the company has fixed the price band in the range of Rs 130 to Rs 140 per share. .NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Anand Rathi Report.Scoda Tubes Ltd. IPO has opened today for subscription and the offer closes on May 30. The Ahmedabad-based manufacturer and marketing of stainless-steel tubes and pipes has fixed the price band in the range of Rs 130 to Rs 140 per share. The share of Scoda Tubes will list on both NSE and BSE. The investors can place bids starting from a minimum of 100 shares and in multiples thereafter.The Rs 220 crore IPO comprises only of fresh issue with no component of offer-for-sale. .Objects of the Issue Capex towards expanding production capacity of seamless and welded Pipes and tubes.Funding incremental working capital & General purpose..Valuation & outlook Scoda Tubes is involved in the manufacturing and marketing of stainless-steel tubes and pipes since 14 years. A key differentiator in Scoda Tubes’ manufacturing process is its hot piercing mill, which is utilized for the production of mother hollows the primary raw material used in the manufacture of stainless steel seamless tubes. The company leverages a modern manufacturing process that enables cost-effective production, enhancing operational efficiency. It has an order book worth Rs 130 crore on hand. Rising demand across the industries bodes well. This being capital intensive segment, surplus working capital availability post IPO and the completion of proposed expansion will further improve its top and bottom lines going forward. .On valuation parse, based on annualised FY25 it is seeking PE of 25.2 times, FY24 earnings PE stands at 45.9 times and post issue market cap comes at Rs 8,387 million with this the issue is fully priced. We believe that company’s key differentiator is its manufacturing process of its crucial raw material which enables backward integration, enabling Scoda Tubes to exercise greater control over production costs, reduce dependence on third-party suppliers, and improve overall operational efficiency. As the issue is fully priced we give “Subscribe for long term” rating for the issue..Key Risks Customer Concentration Risk– Company’s business is primarily concentrated among its top 10 customers. A loss or significant reduction in orders from any of these key customers, particularly the largest one, could materially impact the company’s business performance and financial health. Dependence on Stockist Network– Business relies on a network of stockists, including exclusive partners in Maharashtra (India) and the United States, for the sale and distribution of its products. Any disruption, termination, or underperformance in these arrangements could adversely impact the company’s business operations and financial performance.Raw Material Dependency Risk– Company’s business and profitability are closely tied to the availability and cost of raw materials, sourced primarily from third-party suppliers. Any supply disruptions or price volatility could adversely affect the company’s operations and financial performance. Capital Expenditure Risk- Ongoing capital expenditure towards welded pipes, despite low capacity utilization, may not yield a proportional increase in revenue, potentially impacting returns on investment. Working Capital and Market Responsiveness Risk- Scoda Tubes operates with prolonged working capital cycles and an extended cash conversion period. Inability to adapt swiftly to market demand and customer preferences could adversely impact its operations, cash flows, and financial performance..Click on the attachment to read the full report:.LIC Q4 Results Review: APE Decline Continues; VNB Margin Expands; Motilal Oswal Maintains 'Buy'.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Scoda Tubes IPO - Price Band, Issue Details, Financials, Peer Comparison, Risks - Read Anand Rathi's Analysis

Scoda Tubes' Rs 220 crore IPO opened for subscription on May 28 and the company has fixed the price band in the range of Rs 130 to Rs 140 per share.

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Scoda Tubes IPO - Price Band, Issue Details, Financials, Peer Comparison, Risks - Read Anand Rathi's Analysis

Scoda Tubes' Rs 220 crore IPO opened for subscription on May 28 and the company has fixed the price band in the range of Rs 130 to Rs 140 per share.

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