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| Product | Quantum (Rs. Cr) (SEBI) | Quantum (Rs. Cr) (Other FSR) | Long Term Rating | Short Term Rating | Regulated By |
| Bank Loan Ratings | 0.00 | 292.00 | ACUITE A+ | Stable | Upgraded | - | RBI |
| Bank Loan Ratings | 0.00 | 270.00 | - | ACUITE A1+ | Upgraded | RBI |
| Total Outstanding | 0.00 | 562.00 | - | - | - |
| Total Withdrawn | 0.00 | 0.00 | - | - | - |
| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Rating Rationale |
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Acuité has upgraded the long-term rating to 'ACUITE A+' (read as ACUITE A plus) from 'ACUITE A' (read as ACUITE A) and the short-term rating to 'ACUITE A1+' (read as ACUITE A one plus) from 'ACUITE A1' (read as ACUITE A one) on the Rs.562.00 Cr. bank facilities of Sambhv Steel Tubes Limited (Erstwhile Sambhv Steel Tubes Private Limited). The outlook remains 'Stable'.
Rationale for rating upgrade The rating upgrade factors in robust growth in operating performance in FY2026 and Q1FY2027 driven better capacity utilisations and improved realisations through product diversifications. The rating continues to remain supported by a healthy financial risk profile despite the ongoing debt funded capex plans. The rating continues to draw comfort from the presence of strong promoter group with an extensive experience in the industry with an integrated business operations and constant capacity expansions which aids growth. The liquidity also remains strong. However, these strengths are partly offset by the moderately working capital-intensive nature of operations and the inherent cyclicality of the steel industry, marked by commodity price volatility. The rating also takes cognisance of the company’s ongoing significant greenfield and brownfield capex, timely completion and materialisation of which without any cost overruns or higher than expected debt remains a key rating monitorable. |
| About the Company |
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Incorporated in 2017 and based in Raipur, SSTL is a backward-integrated manufacturer of ERW steel pipes, structural tubes (hollow sections), GP coils, GP pipes, GI pipes, CRFH pipes, and steel door frames. The company manufactures key intermediate products such as sponge iron, blooms/slabs, HR coils, and CR coils in-house, supporting its integrated operations. SSTL operates two manufacturing units at Sarora and Kuthrel (Chhattisgarh) with installed capacities of 3,50,000 MTPA of ERW pipes and tubes, 1,16,000 MTPA of GP coils, 1,00,000 MTPA of GP pipes, and 1,16,000 MTPA of stainless-steel coils. SSTL also operates a 25 MW captive power plant. The company is managed by experienced directors, including Mr. Suresh Kumar Goyal, Mr. Vikas Kumar Goyal, Mr. Kishore Kumar Singh, Mr. Manoj Khetan, Ms. Nidhi Thakkar, and Mr. Bhavesh Khetan.
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| Unsupported Rating |
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Not applicable
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| Analytical Approach |
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Acuite has considered standalone business and financial risk profile of Sambhv Steel Tubes Limited -SSTL (Erstwhile Sambhv Steel Tubes Private Limited) (SSTPL) to arrive at the rating.
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| Key Rating Drivers |
| Strengths |
| Extensive experience of the promoters
SSTL is promoted by the Raipur-based Goyal family, which has over three decades of experience in the steel industry. The company benefits from the promoters' extensive industry knowledge and established relationships with customers and suppliers. Further, its integrated manufacturing facilities, located in Chhattisgarh, a mineral-rich state with ready access to key raw materials such as coal and iron ore. The company markets its products through a network of 47 distributors across 15 states and one Union territory, supported by over 1,000 dealers nationwide. Acuité believes that the promoters' long track record and industry experience will continue to support the company's operational performance and growth initiatives over the medium term. Integrated nature of business operations The company operates a fully integrated manufacturing setup with both forward and backward linkages. Backward integration includes in-house production of sponge iron and billets, which serve as key raw materials for downstream processes. Forward integration is reflected in the production of finished goods such as HR coils and sheets, CR coils, ERW and GI pipes, GP pipes, and stainless-steel products. This structure enables the company to manage its supply chain internally across multiple stages of steel processing, from raw material conversion to final product delivery. Growing scale of operations supported by capacity expansion and product diversification The company reported a significant growth in revenue, which increased by 59.65% to Rs. 2,413.90 Cr. in FY2026 from Rs. 1,511.97 Cr. in FY2025. The growth was primarily driven by higher sales volumes, along with the higher capacity utilisation and a significant increase in the contribution of value-added products, particularly stainless steel and pre-galvanized coils and pipes.The operating margin improved to 11.52% in FY2026 from 10.30% in FY2025, mainly supported by higher sales volumes, improved product mix, strong operating leverage and better capacity utilisation across newly commissioned manufacturing facilities. The PAT margin improved to 5.94% in FY2026 from 3.84% in FY2025, on account of higher operating profitability, reduction in finance costs. The company has reported revenue of Rs. 732.17 Cr. with the operating margin of 13 percent and PAT margins of 7.3 percent during Q1FY2027 as compared to Rs. 558.63 Cr, 13.02 percent and 5.98 percent respectively in Q1FY2026. Going forward, the company’s scale of operations is expected to further strengthen, driven by ongoing capacity expansion, a more integrated operational framework, increasing contribution from value-added steel products, which is expected to command better realisations and margins. Healthy financial risk profile The company’s financial risk profile remains healthy, marked by a strong net worth, low gearing, and strong debt protection metrics. The tangible net worth improved significantly to Rs. 1,055.40 Cr. as on March 31, 2026, from Rs. 496.03 Cr. as on March 31, 2025, primarily on account of IPO proceeds and accretion of profits to reserves. The gearing reduced to 0.36 times as on March 31, 2026 from 1.08 times as on March 31, 2025, following the deployment of IPO proceeds towards debt reduction coupled with an increase in the net worth, while the company has availed additional debt for ongoing capex. The debt protection metrics remain strong, with the interest coverage ratio improving to 6.64 times in FY2026 from 3.39 times in FY2025, and the debt service coverage ratio (DSCR) improving to 2.45 times from 1.64 times during the same period. Further, on July 15, 2026, the board approved the issuance convertible warrants on a preferential basis at an issue price aggregating up to Rs.100 Cr. The proposed fund raise is intended to support the company's planned capacity expansion/new manufacturing facility, incremental working capital requirements, investment in its wholly owned subsidiary - Sambhv Tubes Limited through unsecured loans for capex funding, and other general corporate purposes. Additionally, the company has envisaged an incremental debt of ~ Rs. 815.00 Cr. (of which Rs. 202.58 Cr. drawn as on June 30,2026) over FY26-FY28 to fund its ongoing greenfield and brownfield expansion projects. However, Acuité believes the company's financial risk profile is expected to remain healthy over the medium term, supported by improved profitability, proposed equity infusion, and adequate cash accrual generation, despite the increase in debt levels arising from the planned capex. |
| Weaknesses |
| Moderately intensive working capital management
The company’s working capital operations remain moderately intensive, as reflected in gross current asset (GCA) days of 127 days in FY2026, (123 days in FY2025). The working capital intensity is primarily driven by moderate inventory levels, stable receivable cycle, and a portion of funds tied up in other current assets, which mainly comprise advances given for procurement of goods and services. Inventory holding remained relatively high, with inventory days increasing to 76 days in FY2026 (68 days in FY2025). This is largely on account of the company maintaining adequate raw material inventory (iron ore and coal) to ensure uninterrupted production and to mitigate price volatility risks through bulk procurement. The receivable cycle remained comfortable, with debtor days improving to 34 days in FY2026 (36 days in FY2025). Risk associated with ongoing capex project The company is undertaking greenfield project towards its stainless-steel operations at Kesda, Chhattisgarh at a project cost of Rs 957.47 Cr, to be funded through debt of Rs. 675.00 Cr. and promoter contribution/internal accruals of Rs. 282.47 Cr. Till June-26, ~ Rs. 450.00 Cr. cost has been incurred, funded through debt drawdown of Rs. 202.58 Cr. and the balance through internal accruals. The capex is expected to materialise and commence operations from October 2027. Apart from this, the company is also planning a brownfield expansion project of ERW pipes and tubes adding 1,50,000 MTPA capacity and setting up a 30 MW captive power plant at Sarora unit at a total project cost of ~ Rs. 200.00 Cr, to be funded through proposed debt tie up of Rs. 140.00 Cr and promoter contribution/internal accruals of Rs. 60.00 Cr. Till June -26, Rs 50.00 Cr cost has been incurred with targeted completion timelines of October 2027. Thus, delay in completion or higher than expected increase in its debt funded capex and subsequently debt addition thereby impacting SSTL‘s capital structure, liquidity, and debt protection metrics will remain a key rating monitorable. Intense competition and inherent cyclical nature of the steel industry The downstream steel industry remains heavily fragmented and unorganised. Therefore, the company is exposed to intense competitive pressures from large number of organised and unorganised players along with its exposure to inherent cyclical nature of the steel industry. Additionally, prices of raw materials and products are highly volatile in nature causing an adverse impact on the profitability of the company. |
| ESG Factors Relevant for Rating |
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SSTL focuses on sustainability across environmental, social and governance aspects. Environmentally, it invests in waste heat recovery boilers and AFBC technology to reduce emissions, implements a zero liquid discharge policy, and supports rainwater harvesting and local tree plantation initiatives. Socially, the company's CSR efforts include organizing health camps benefiting over 3,100 villagers, sponsoring education and sports in 14 schools, and providing skills training to more than 5,000 youth, alongside supporting women's empowerment and improving village infrastructure. In terms of governance, SSTL upholds strong corporate practices with a transparent, accountable leadership model, independent directors on the Board, and a dedicated CSR Committee, all aligned with SEBI regulations.
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Rating Sensitivities
| Potential triggers (individual or collective) for an upward rating action: |
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| Liquidity Position |
| Strong |
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The company’s liquidity position remains strong, supported by healthy cash accruals vis-à-vis repayment obligations, with net cash accruals of Rs. 191.78 Cr. in FY2026 against repayments of Rs. 52.96 Cr. For FY 2027-2029 , accruals are expected in the range of Rs. 234–477 Cr, comfortably covering debt repayments of ~Rs. 7–76 Cr. Liquidity is further supported by cash & bank balances of Rs. 61.62 Cr, liquid investments of Rs. 100 Cr, and a moderate current ratio of 1.26 times as on March 31, 2026. Additionally, the company has adequate headroom in working capital limits, with average utilisation at ~46.38% for fund-based facilities and ~32.66% for non-fund-based facilities for six months ended July 2026. Acuité expects liquidity to remain adequate over the medium term, supported by steady accruals, despite incremental debt for ongoing capex.
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| Outlook-Stable |
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| Other Factors affecting Rating |
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None
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| Particulars | Unit | FY 26 (Actual) | FY 25 (Actual) |
| Operating Income | Rs. Cr. | 2413.90 | 1511.97 |
| PAT | Rs. Cr. | 143.27 | 58.04 |
| PAT Margin | (%) | 5.94 | 3.84 |
| Total Debt/Tangible Net Worth | Times | 0.36 | 1.08 |
| PBDIT/Interest | Times | 6.64 | 3.39 |
| Status of non-cooperation with previous CRA (if applicable) |
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Not applicable
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| Any other information |
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None
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| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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| Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
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Contacts |
List of instruments and names of regulators of the instruments |
