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Sambhav Steel, a fast-growing manufacturer of steel pipes and structural tubes, made a remarkable entry on Dalal Street.

The company raised ₹540 crores through an initial public offering (IPO), comprising ₹440 crores as fresh issue and ₹100 crores via offer for sale. It listed at ₹110 on 2 July, at a 34% premium to the upper price band of ₹82 per share.

Prima facie, it looks like a smaller player—and it certainly is. But its financial metrics are anything but ordinary. That’s what caught the Street’s attention. The company now aims to triple its revenue to ₹4,500 crores by FY28, up from ₹1,511 crores in FY25. To support this, it has lined up multiple capacity expansions.

That’s not all. Following the IPO, Sambhav also plans to deleverage its balance sheet by repaying ₹390 crores from the proceeds. So, what exactly does Sambhav do? What sets it apart from its larger peers? And how does it plan to scale up?

We take a closer look at the story unfolding here.

Sambhav manufactures electric resistance welded (ERW) pipes, pre-galvanized pipes, stainless steel coils, and more.

As of FY24, Sambhav had a market share of around 2% in the domestic ERW pipe segment. With a production capacity of approximately 1.7 million metric tonnes per annum (MTPA), it caters to a wide range of industrial and infrastructure applications. It also enjoys healthy capacity utilisation, driven by strong demand.

This includes infrastructure projects, pre-fabricated buildings, water supply, oil and gas, automobile, and others. It also supports government schemes like Jal Jeevan Mission and Har Ghar Nal Yojana. The company has built a distribution network of over 700 dealers across 15 states.

Also read: After US' 50% tariff blow, India now faces EU heat on steel quotas

Sambhav is the only company in India with a fully backward-integrated, single-location facility spanning the entire value chain, from raw materials to finished products. It also operates a 25-megawatt (MW) captive power plant. This integration helps it reduce dependence on external suppliers, shorten delivery times, and improve margins and working capital efficiency.

Sambhav also has one of the most advanced manufacturing facilities in the segment. It is among the few Indian companies producing stainless steel blooms and slabs using the AOD (Argon Oxygen Decarburization) process. This lowers raw material consumption, and boost precision and product quality, leading to a cost advantage.

This advantage allows it to boast leading Ebitda per tonne (of ₹5,321) among peers. Other players including market leader APL lag significantly. Notably, the metric has fallen due to underutilisation of new capacity, but is expected to recover as utilisation improves.

It is also one of only two players (the other being Avon) to use narrow-width HR coils for pipe manufacturing. This enables strip thickness control with a tolerance of 0.05 mm, on par with top industry benchmarks. According to Niveshaay, an investment advisory firm, most players in this segment lack such precision technology.

This translates into higher product quality, reduced wastage, and better yield. Niveshaay estimates that due to its product quality, Sambhav commands a dominant market share of 30% in Madhya Pradesh, with distributors in Indore reporting 100% repeat orders.

Besides technology, Sambhav's strategic location also plays a key role. Sambhav’s 1.5 MMT facility is located near Raipur in mineral-rich state Chhattisgarh. This ensures proximity to raw material suppliers, efficient logistics, and reduced input costs.

These advantages help it sell at competitive prices while offering higher margins to its distributors. Sambhav offers lower ex-plant prices ( ₹55,000– ₹57,000 per metric ton) compared to HRC industry delivered rates ( ₹60,000– ₹64,000). It also provides higher distributor margins of ₹1,000– ₹3,000, versus ₹500– ₹2,000, as per Niveshaay. This itself is also a competitive advantage.

Sambhav's operations are geographically concentrated.

In FY24, 66% of sales came from just three states, Chhattisgarh (30%), Maharashtra (18%), and Gujarat (18%). This over-reliance exposes it to regional concentration risk. To address this, the company plans to expand into under-penetrated states like Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Delhi, and Goa. FY25 numbers are not yet available.

Its distributor concentration is also rising. In 9MFY25, the top distributor accounted for 9% of revenue, the top five (35%), and the top ten (52%). In contrast, these figures stood at just 5%, 14%, and 17%, respectively, in FY23. Going forward, the company will need to diversify its distribution network to avoid over-reliance on a few large partners.

Structural pipes and tubes remain the core of Sambhav’s portfolio, and demand has surged sharply. Sales volume jumped more than threefold—from 65,687 MTPA in FY23 to 212,436 MTPA in FY25—driven by robust infrastructure and construction demand.

These products now account for 73% of total sales volume, with intermediate products contributing 19%. Newly introduced products like GP coils and pipes (4%) and SS coils (3%) made up the rest of the volume mix.

The revenue mix is similar, with structural pipes contributing 70% of FY25 revenue, followed by intermediate products (14%), SS coils (8%), GP coils and pipes (5%), and others (3%).

However, this concentration is expected to moderate. The company has recently started production of SS Coils and GP coils and pipes in FY25. As capacity utilisation improves, these segments are likely to contribute more to the topline.

Sambhav's revenue has grown 61%, from ₹937 crores in FY23 to ₹1,511 crores in FY25. This growth has been driven by capacity expansion over the years. Its fixed assets have grown from ₹235 crores in FY23 to ₹715 crores. However, since the newly added capacity is still ramping up, utilisation remains low, leading to slight pressure on margins.

Also read: Shree Cement’s premium push is paying off—for now

Ebitda margin declined from around 12.5% in FY23/24 to 10.2% in FY25. Profit after tax (PAT) margin halved from 6.4% to 3.8%, mainly due to a threefold rise in depreciation and a 2.5x increase in finance costs.

As a result, Sambhav's PAT fell 4% from FY23 to ₹58 crores in FY25. But the decline is sharper around 30% from FY24. Lower profitability has also impacted its return ratios. Return on Capital Employed and Return on Equity both fell to 12% in FY25, from 18% and 25% in FY24.

However, the company has a strong track record of strong return ratios. That’s why despite near-term pressure; they are expected to improve as capacity utilisation rises and debt reduces. Sambhav expansion has come at a cost.

Borrowings increased from ₹285 crores (FY23) to ₹536 crores in FY25, pushing finance cost from ₹19 crores to ₹48 crores. However, it plans to repay ₹390 crores from the IPO proceeds, which should lift its PAT, and margin. Leverage is set to ease from 3.5x Debt-to-Ebitda in FY25, with a sharp improvement expected in interest coverage as well

Sambhav also has ambitious plan. The company now aims to triple revenue to ₹4,500 crores by FY28. Management expects FY26 revenue to reach ₹2,200 crores, based on Q1FY26 annualized figures of ₹558 crores. To drive this, it plans to increase stainless steel’s share in the product mix—from 30% in FY26 to 40% in FY27, and 50% in FY28.

For this, it is setting up a new 1.2 MTPA stainless steel facility at Kesda, Chhattisgarh, to be commissioned in three phases. The first phase is expected to be commissioned by FY27, adding about 360,000 tonnes of capacity. This expansion is aimed at meeting the rising demand for stainless steel across industries.

After listing at ₹99 on July 7, Sambhav’s share price has surged 25% to ₹124. It currently trades at an EV/Ebitda multiple of 26, which is lower than APL Apollo (33), which commands a premium due to its leadership. However, compared to peers like Hariom Pipe (10), Hi-Tech Pipes (11), and JTL Industries (20), Sambhav trades at a premium.

The valuation leaves limited margin of safety. That said, Sambhav is growing rapidly, has best-in-class margins and return ratios, and is backed by experienced promoters with decades in the steel industry. Future upside, however, hinges on timely execution of its expansion plans. Meanwhile, it remains a stock worth tracking closely.

Madhvendra has over seven years of experience in equity markets and writes detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.

The writer does not hold the stocks discussed in this article.

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.

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