1. The Big Picture: What’s the IPO About?
Sambhv Steel Tubes Ltd (SSTL), headquartered in Raipur, Chhattisgarh, launched its ₹540 crore IPO between June 25–27, 2025, with a price band of ₹77–₹82 per share. The issue comprises:
- A fresh issue of approximately ₹440 crore.
- An offer for sale (OFS) of around ₹100 crore from promoters.
The primary goal? Debt reduction—chiefly targeting ₹390 crore from outstanding loans—with the balance allocated to general corporate expenses. Once listed, the shares are scheduled to debut on July 2, 2025, on both NSE and BSE.
2. Core Strengths: Why the Optimism?
SSTL’s appeal lies in its backward‑integrated production model, supported by two operational facilities in Sarora and Kuthrel, boasting capacity growth from 1.12 mtpa in FY24 to 1.70 mtpa by FY25.
Key advantages include:
- Vertical integration: Controls everything from sponge iron, HR/CR coils to finished ERW pipes.
- Broad product range: From black pipes to pre‑galvanized, Corten, GI, and structural hollow tubes.
- Sectoral tailwinds: Benefit from government projects like Jal Jeevan and Amrit Bharat, plus rising demand across automotive, infrastructure, oil & gas, and telecom.
- Impressive financials: FY24 revenue at ₹1,285.8 crore (25–37% YoY growth), EBITDA at 12–12.4%, PAT at 6.4%, and return on equity near 18–19%.
At the upper band, SSTL trades at a P/E of ~44.5× (FY25 annualized) and EV/EBITDA ~18×—slightly above sector averages but supported by its integrated model and future growth potential
3. Subscription Snapshot: Day-by‑Day Surge
Day 1 (June 25): About 31–60% subscribed, with early GMP at 6–11% (₹5–₹9 premium) .
Day 2 (June 26): Fully subscribed, hitting 1.34×–1.60× overall. Retail: 1.2–1.44×; NIIs: 1.7–2.65×; QIBs: ~61%. GMP held firm at ₹9–₹10 (~11%) .
Day 3 (June 27): Final oversubscription surged to 3.3×—NIIs bid ~7.5×; retail ~3.1×; QIBs still ~61%. GMP climbed to ₹12–₹14, indicating 14–15% premium over issue price .
4. The Grey Market Premium (GMP): What It Signals
GMP measures how much investors are willing to pay (unofficially) above the IPO price before listing:
- Launch (June 25): GMP ~6–11% (₹5–₹9); moderate enthusiasm.
- Mid subscription (June 26): GMP stabilized at 11% (₹9–₹10), reflecting steady demand.
- Final day (June 27): GMP rose sharply to 14–15% (₹12–₹14), signaling bullish sentiment for post‑listing rally.
A rising GMP throughout indicates growing investor interest and likely open listing gains. Considering the upper band (₹82) plus GMP (~₹12), target listing price projects around ₹94—suggesting a near 14% gain livemint.com.
5. Analyst Views: Chorus of “Subscribe”
Several brokerages have endorsed the IPO:
- Geojit, BP Wealth, Choice Broking, SBI Securities, Canara Bank Securities, Ventura — all issued “Subscribe” ratings, citing strong fundamentals, integrated operations, and growth trajectory.
- Valuation context: While P/E and EV/EBITDA are slightly above peers, analysts argue justified thanks to integration, raw-material advantage, and expanding product mix.
6. Risks & Considerations
No IPO is risk-free. Potential concerns include:
- Valuation premium: With P/E at ~44×, any negative macro or sectoral headwinds could dampen sentiment.
- QIB subscription lag: Institutional uptake remained subdued (~61%), which may translate to volatility post-listing.
- Market conditions: Broader equity trends or steel sector-specific news closer to listing day (July 2) could affect listing performance.
7. What It Means for Investors
- Retail investors: Those who secured allotment at a GMP-adjusted price should benefit from likely listing pop (10–15%), per grey market signals.
- Prospective investors: For those unsubscribed, buying on day one at listing (~₹94) may be worthwhile—but be mindful of market distortions.
- Long-term holders: If you believe in the infrastructure boom, steel pipes demand growth (expected 8–9% CAGR to FY29), and SSTL’s integrated advantage, holding beyond listing could yield robust returns.
Final Take
Sambhv Steel Tubes’ IPO presents a compelling package:
- Strong corporate story: Backward-integration, product diversity, sector tailwinds.
- Healthy financials: Double-digit growth and margins, debt reduction focus.
- Subscription spike & firm GMP: A clear indicator of investor demand.
- Analyst support: Consistent “Subscribe” calls across brokerages.
That said, weigh valuation and broader market sentiment ahead of July 2 listing. Short-term traders can expect a 10–15% listing jump, while long-term investors with faith in steel and infrastructure may find the prospects even more enticing.