Scoda Tubes Limited: Navigating Growth with Strategic Expansion in H1 FY26

Scoda Tubes Limited, a prominent manufacturer of stainless steel tubes and pipes, has reported a steady performance for the first half of fiscal year 2026 (H1 FY26) and the second quarter (Q2 FY26). The company's consolidated revenue from operations grew by 5% year-on-year to INR 242.7 crores in H1 FY26, with Q2 FY26 revenue broadly flat at INR 145.3 crores. Net earnings demonstrated robust growth, increasing by 39% in H1 FY26 to INR 21.1 crores and 34% in Q2 FY26 to INR 14.0 crores. This growth was accompanied by an improvement in PAT margin, which rose to 8.7% in H1 FY26 from 6.6% in H1 FY25.

The company's performance reflects its strategic focus on capacity expansion and international market penetration. Domestic revenue contributed 71% of the total in H1 FY26, amounting to INR 172.3 crores, while exports accounted for 29% (INR 70.4 crores). Europe was a significant export market, contributing 24% of total revenue (INR 58.2 crores), and America accounted for 5% (INR 12.1 crores). Scoda Tubes serves diverse sectors including oil & gas, chemicals, fertilizers, power, pharmaceuticals, automotive, and transportation, showcasing a well-diversified customer base across 32 countries.

Strategic Initiatives Driving Future Growth

Scoda Tubes Limited is actively pursuing several strategic initiatives to bolster its market position and drive future growth. A key focus is the expansion of its seamless and welded production capacities. The civil construction for seamless capacity expansion has been completed, increasing the current capacity from 10,000 MTPA to 17,000 MTPA. The company anticipates reaching 20,000 MTPA by December 2025 with the delivery of two new pilger machines. Production for this expanded capacity commenced in November 2025, following trial runs in October. The company aims for a blended utilization of 60-65% by FY26 and 80% by FY27.

For welded tubes and pipes, plant construction has begun, and key equipment orders have been finalized. Commercial production for the expanded welded capacity, which will increase from 11,088 MTPA to 33,128 MTPA, is targeted for Q1 FY27. Management expects 30% utilization in FY27 and full utilization by FY28. These expansions are crucial for meeting the growing demand in various high-growth sectors, including power and renewable energy, which the company sees as significant opportunities for the next five years.

Expanding International Footprint and Market Diversification

In a strategic move to strengthen its international presence, Scoda Tubes Limited recently acquired Arvind sp. zo.o., a trading firm based in Poland. This acquisition is designed to expand the company's footprint in the Eastern European market and open new opportunities in sectors such as oil & gas, heat exchangers, and refineries. By leveraging Arvind's established distribution network and over 20 years of local expertise, Scoda Tubes aims to enhance its market access and customer segments in Europe. The company's exports are already diversified, with a strong presence in 32 countries, and it continues to explore new markets and applications, such as the water purification industry, as evidenced by a recent USD 1 million order from a US client.

Furthermore, the company benefits from favorable policy protection, including anti-dumping duties on Chinese imports, which provides a fillip to local producers and strengthens India's position as a significant global producer. Management also highlighted that raw material prices have remained largely stable and are expected to continue so for the next 12 months, providing a stable cost environment for operations.

Financial Prudence and Outlook

Despite the robust growth and strategic expansions, the company is managing its working capital diligently. While inventories increased from INR 149.8 crores in FY25 to INR 213.8 crores in H1 FY26, management explained this as a proactive measure to stock up for anticipated demand in H2 FY26, expecting inventory levels to normalize from Q3 FY26. The company's net debt-to-equity ratio significantly improved to 0.2x in H1 FY26 from 1.1x in FY25, reflecting disciplined capital allocation and a stronger balance sheet. IPO proceeds have been strategically deployed, with INR 27 crores for capex, INR 110 crores in bank balances, and INR 50 crores for working capital.

Looking ahead, Scoda Tubes Limited targets a revenue growth of 20% as the new capacities come online. Margins are expected to remain in the 15-16% range, driven by a higher contribution from welded products and new product launches. The company remains confident in its growth trajectory, underpinned by continued investments in capacity expansion, operational efficiency, and strategic market diversification. The focus remains on delivering optimal returns and creating long-term value for all stakeholders, positioning Scoda Tubes as a reliable and growing player in the stainless steel industry.