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Indian markets have many listed companies from the Steel tubes and pipes industry and some like Surya Roshni, Ratnamani Metals, APL Apollo have created immense wealth for their shareholders.
Recently, we were looking at Surya Roshni as the stock is down almost 60% from its peak price of 850 in Oct’21. We like searching for good companies going through a bad phase either in terms of their business performance or stock price.
While Surya is more famous for its lighting products; did you know that Steel tubes and Pipes segment accounted for 80% of its sales in FY 22 and 76% of its earnings before interest and taxes.
Overall, the numbers of the company look interesting and we therefore decided to dig deeper into the industry and have shared the details below:
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Indian Steel Tubes and Pipes industry
- The estimated value of Indian Steel tubes and pipe industry is around Rs 60,000 crore
- It is primarily divided into Stainless Steel (SS) pipes and Carbon Steel pipes, both of which have further sub divisions
- Seamless steel pipes are characterized by a perfect finishing that is flawless and able to resist more pressure
- In a welded pipe, edges of the steel are forced together and sealed with a weld
- The weld joint is the weaker part of the pipe and the strength of the pipe is limited to the strength of the weld joint
- Differences between Seamless and Welded pipes are as below:
- In the Carbon Steel pipes segment, ERW (Electric Resistant Welded) has been the fastest growing segment
- It includes GI Pipes, Black Round Pipes, Section Pipes, API Pipes
- The end users for Steel pipes industry are classified as – oil & gas and non-oil & gas
- In the oil & gas space, pipes are used for exploration and production (E&P) and transportation. HSAW, LSAW, ERW and Seamless pipes are used in oil & gas
- In the non-oil segment, pipes are used in engineering, auto, power plants, water and sewage, metros, airports and malls. HSAW, ERW and Seamless pipes are used in the non-oil segment
There are certain Govt. schemes that are favourable for the growth of Steel tubes and pipes industry
- National gas grid is expected to increase from current 18,000 km to 34,500 km in 5-7 years
- Estimated requirement of GI pipes under Jal Jeevan Mission (JJM) scheme is ~15,00,000 tonnes till 2024.
Overall, the industry is worth digging deeper as the opportunities ahead look interesting.
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Disclaimer: This is not a recommendation to buy/sell Surya Roshni. The notes on the industry are only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
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