A metal stock has been on a solid uptrend lately, rising almost 60% in the last six months despite weak stock market sentiment. Shares of Sambhv Steel Tubes are up 60% in the last six months compared to a nearly 2% fall in the equity benchmark Sensex.
It hit a 52-week high of ₹167.30 on 30 September after hitting a 52-week low of ₹80.70 on 1 February this year.
In intraday trade on Thursday, 1 October, the stock crashed more than 5% due to profit booking amid weak stock market sentiment.
Should you buy the stock on dips? Can it rally further?
Choice Broking says buy
Brokerage firm Choice Equity Broking has initiated coverage on the stock with a buy recommendation, fixing the target price of ₹210, implying a 27% upside potential in the stock from its 30 September closing of ₹164.85.
In a bull case, Choice Broking expects the stock to rise to ₹256, while in a bear case, assuming capex execution delay or import margin pressure, the stock may decline to ₹152.
According to the brokerage firm, sustained government capex and expanding structural applications make Sambhv Steel Tubes well-positioned to benefit from India’s growing finished steel demand.
“Core market segments show robust growth: HR (hot-rolled) steel is projected to expand by 7%–9.0% annually; ERW (electric resistance welded) pipes and tubes – Sambhv Steel Tubes’ main revenue driver (45% of FY26 revenue) – is set to grow at nearly 8.5% annually to 12.5–13.0 million tonnes by FY29E,” said Choice.
“India’s stainless steel market offers high-margin mix-upgrading potential, reaching nearly ₹1,70,400 crore by FY30E (8.2% CAGR). Supported by a 3.4 times capacity expansion and integrated HR coil production, Sambhv Steel Tubes requires minimal market share gains to achieve scalable volume and margin growth,” the brokerage firm added.
As per the estimates of the brokerage firm, Sambhv Steel Tubes’ EBITDA and PAT may compound at 47% CAGR each (FY26–FY29E) to reach ₹878.5 crore and ₹448.1 crore, respectively, by FY29E, supported by single-site integrated operations and captive power cost advantages.
“As new assets start earning full revenue, return ratios will rebound sharply, pushing ROE back to nearly 25%,” said Choice Broking.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the broking firm. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
