Sambhv Steel IPO

As a backward-integrated manufacturer of ERW black steel pipes and structural tubes and SS coils, the company also benefits from utilising mild steel as well as stainless steel scrap generated across our pipe and tube mill, hot rolling mill, cold rolling mill, and steel melt divisions to manufacture blooms/ slabs.

The company has set up its factories strategically, in well-chosen locations. This helps it work more efficiently and also gives it direct access to a special type of high-quality iron ore called DRCLO, which it uses to make its products.

The company’s strong innovation and execution help it make value-added products. It began by producing narrow-width HR coils and now uses sponge iron or DRI in induction furnaces instead of costly, hard-to-find steel scrap.

The company has a widespread well well-connected distribution network across India. As of December 31, 2024, the company has 37 distinct distributors with two distributors distributing through six branches in 15 states and one union territory, taking the total distributor network to 43.

Well-positioned to take advantage of the growing demand for quality ERW steel pipes and tubes.

Experienced Promoters and management team with vast experience in the steel industry.

The company’s profitability relies heavily on achieving high capacity utilisation. Factors such as accurate demand forecasting, uninterrupted operations, product mix, and cost control all influence this. Any operational disruption, such as labour unrest, power or water shortages, or weak demand, can lower utilisation, leading to inefficiencies and impacting profitability, margins, and cash flows.

Sambhv Steel depends on raw materials such as iron ore, coal, sponge iron, and MS scrap. Price fluctuations or shortages in these materials can increase costs. If the company cannot pass on the cost hikes or manage supply effectively, it may face margin pressure and working capital challenges, affecting overall performance.

The company relies on a few key suppliers for critical raw materials and lacks long-term contracts with most of them. This dependence limits its bargaining power and may result in inconsistent or delayed supplies. Any disruption in procurement could impact production schedules, cost efficiency, and ultimately, the company's financial results.

As of April 30, 2025, total borrowings stood at ₹554.58 crore. To meet growth and operational needs, more capital may be required. If the company cannot secure financing on favourable terms or at all due to rising interest rates or market conditions, it could face liquidity issues and hindered expansion.

A major portion of revenue comes from ERW black pipes, GI pipes, and hollow sections. This limited product range makes the company vulnerable to demand shifts, market saturation, technological changes, or substitutes. Any downturn in demand for these specific products could significantly affect business sustainability, margins, and future growth prospects.

The company’s manufacturing operations need a steady power, water, and fuel supply. While a captive power plant meets part of its needs, it still relies on external sources. Disruptions in utility supply or rising energy and water costs can lead to production halts, higher operating expenses, and reduced profitability over time.

Sambhv’s return on capital employed (ROCE) has been declining due to falling EBIT and increased capital investments. Recent expansions have raised capital employed, but if returns don’t improve, this imbalance may hurt profitability. Poor return management could signal inefficient capital use and weaken the company’s ability to generate sustainable growth.

The company earns most of its revenue from North and West India. This regional dependence makes it vulnerable to local economic conditions, political or social unrest, natural disasters, and regulatory changes. Adverse developments in these areas could disrupt operations, reduce sales, and impact overall financial and operational performance.

The top 10 customers contribute 35.86% of revenue, and the top 10 distributors 17.30%, indicating high concentration risk. Losing any key account or facing a drop in business from major partners could disrupt revenue flow. Failure to diversify and grow the client base may affect financial stability and long-term sustainability.