Scoda Tubes IPO subscribed 53.78 times on final day; NII quota sees 113x demand

Scoda Tubes IPO: The initial public offering (IPO) of stainless-steel tubes and pipes manufacturer Scoda Tubes was subscribed 53.78 times on the final day of bidding on Friday. According to NSE data, the IPO received bids for 63,70,52,700 shares against the 1,18,46,169 shares on offer.

The non-institutional investors' category saw robust interest with 113.03 times subscription, while the portion reserved for Qualified Institutional Buyers (QIBs) was subscribed 69.51 times. The Retail Individual Investors (RIIs) segment attracted 19.39 times more bids than the shares available.

Scoda Tubes IPO Day 2: Subscription status

On the second day of bidding, Thursday, May 29, the IPO was subscribed 8.11 times overall, with a total of 9,61,29,600 bids received against 1,18,46,169 shares on offer, according to BSE data. Qualified Institutional Buyers (QIBs) applied for 65,46,000 shares against 33,84,569 available, while the Retail Individual Investors (RIIs) segment was subscribed 6.46 times, receiving 3,82,84,100 bids for 59,23,100 shares.

Scoda Tubes: Anchor investors and IPO details

Before starting its share sale on Tuesday, Scoda Tubes raised Rs 66 crore from anchor investors, showing strong confidence in the company.

The IPO price band is set between Rs 130 and Rs 140 per share. Monarch Networth Capital has been appointed as the book running lead manager (BRLM) for the issue. It is a fresh equity issue worth Rs 220 crore, meaning the company is raising new funds and is not including any offer-for-sale (OFS) shares.

How will IPO funds be used?

The money raised will be used to expand production capacity for seamless and welded tubes and pipes, meet working capital needs, and cover general corporate expenses.

About Scoda Tubes

Founded in 2008, Scoda Tubes manufactures stainless steel seamless and welded tubes. Their products are used in many industries like oil and gas, chemicals, power, railways, and pharmaceuticals. The company is based in Mehsana, Gujarat, and has its own hot-piercing mill as part of its production process. It exports its products to 11 countries, and exports contribute about 28 per cent of its total revenue in the first nine months of this financial year (FY25).

Financially, Scoda Tubes’ revenue has grown a lot—from Rs 194 crore in FY22 to Rs 400 crore in FY24. Its profit after tax increased from Rs 1.63 crore in FY22 to Rs 18.3 crore in FY24. The company’s EBITDA margin, which shows its operating efficiency, improved from 5.15 per cent in FY22 to 14.7 per cent in FY24. Return on Equity (RoE), which measures profitability compared to shareholder investment, is a healthy 28.77 per cent.

However, the company has some concerns. Despite the profits, its operating cash flow was only Rs 2.26 crore in FY24. Also, it depends heavily on a few stockists for sales in India and abroad, which is risky. Finally, the company plans to expand its welded pipes capacity even though current usage levels are still low.