Sambhv Steel Tubes Files for ₹540 Crore IPO: Fresh Issue and OFS Combined

Sambhv Steel Tubes, a prominent manufacturer in the electric resistance welded (ERW) steel pipe sector, has officially filed draft papers with the Securities and Exchange Board of India (SEBI) to raise ₹540 crore through its upcoming initial public offering (IPO). This offering will consist of a fresh issue of equity shares valued at ₹440 crores, alongside an offer-for-sale (OFS) component totalling ₹100 crores, through which existing promoters will divest part of their holdings.

The proceeds from the fresh issue are earmarked primarily for debt repayment and other general corporate purposes. As of March 2024, Sambhv Steel Tubes reported total borrowings of ₹347 crore, underscoring the necessity of these funds to strengthen its balance sheet.

Prominent stakeholders participating in the OFS include Shashank Goyal, Rohit Goyal, Kaushlya Goyal, Harsheet Goyal, and Rinku Goyal, who collectively aim to capitalize on the growth trajectory of the company. Sambhv Steel Tubes is recognized as a key player in the Indian market for steel pipes and structural tubes, boasting significant installed capacity as of the end of March 2024.

According to a report by CRISIL, the demand for domestic steel pipes and tubes is projected to grow at a compound annual growth rate (CAGR) of 5-6% during the fiscal years 2019 to 2025, reaching a total of 12.50 to 13.50 million tonnes per annum (MTPA). This anticipated growth is driven by various government initiatives aimed at enhancing urban infrastructure and boosting investments in the oil and gas sector.

Looking ahead, projections indicate that the demand for steel pipes in India could rise significantly, with estimates suggesting a potential increase to 18.50 to 20.50 MTPA by fiscal 2029, marking a CAGR of 8-9%. Such growth could position Sambhv Steel Tubes favourably within the market as it continues to expand its manufacturing capabilities.

The company has enlisted Nuvama Wealth Management and Motilal Oswal Investment Advisors as the lead managers for this IPO, ensuring robust support for the offering. As the company prepares for its public debut, analysts and investors alike will be closely monitoring the unfolding developments, particularly in relation to the overall health of the steel market and ongoing government initiatives that could further stimulate demand.

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With the Indian steel industry set to witness a transformative phase, Sambhv Steel Tubes is strategically positioned to leverage its established expertise and infrastructure. Investors can anticipate a strong performance from the IPO, considering the promising outlook for the steel sector and the company's proactive approach to debt management and growth.