Scoda Tubes plans 21,150 MTPA welded capacity expansion

Scoda Tubes Limited plans to raise welded-tube capacity from 1,020 metric tonnes per annum (MTPA) to 21,150 MTPA, a stated post-expansion level more than 20 times current capacity. The company also projects that its Gujarat captive solar plant will generate 7.74 million kilowatt-hours annually and save approximately Rs 4.87 crore in electricity costs.

How large is Scoda Tubes' welded-tube capacity expansion?

Scoda Tubes plans a post-expansion welded-tube capacity of 21,150 MTPA, compared with existing capacity of 1,020 MTPA. The presentation places this alongside seamless capacity rising from 10,068 MTPA to 20,068 MTPA and a 20,000-MTPA mother-hollow facility, which supplies an input for seamless products through the hot piercing mill.

The plan would substantially change Scoda Tubes' capacity mix. The company currently reports 20,068 MTPA of seamless capacity and 1,020 MTPA of welded capacity, meaning welded capacity would marginally exceed seamless capacity after the stated expansion. Scoda Tubes identifies large-scale production, high-value-added products, backward integration, its existing customer base and end-user targeting as elements of its growth strategy.

When will Scoda Tubes start the expanded welded operation?

Scoda Tubes says it remains on track to commence trial production at the expanded welded facility in Q4 2027. Management also says dedicated solar capacity for the welded operation is to be commissioned alongside that trial-production milestone, but the presentation does not give a commercial-production date or a capacity-utilisation schedule.

The presentation contains differing capacity references that leave the full build-out timing unclear. Its 2027E milestones refer to increasing welded capacity by 12,000 MTPA, while the product-capacity comparison gives 21,150 MTPA as the post-expansion total. A capacity chart separately shows figures of 32,218 MTPA and 8,000 MTPA for FY28 without explaining their relationship to the product-level comparison.

Scoda Tubes has land allocated for the proposed welded operation. It reports a 74,699-square-metre land parcel, with 37,156 square metres developed for manufacturing and 30,064 square metres reserved for welded products. The facility is located on the Ahmedabad-Mehsana highway, 360 kilometres from Mundra port and 23 kilometres from an Inland Container Depot.

What is Scoda Tubes' solar project expected to save?

Scoda Tubes projects annual electricity-bill savings of approximately Rs 4.87 crore from its Gujarat ground-mounted captive solar plant, which is expected to generate 7.74 million kilowatt-hours a year. The plant has capacity of 3.9 megawatts alternating current and 4.99 megawatts direct current per plant, according to the presentation.

The solar programme includes an existing and a planned component. Scoda Tubes has installed rooftop panels generating 1 megawatt to support manufacturing, and management says solar capacity for seamless operations is already operational. Dedicated solar capacity for the expanded welded facility is planned to be commissioned in Q4 2027 with the start of trial production.

Management cited elevated power, fuel and freight costs as operating challenges during Q2 FY27. In H1 FY27, Scoda Tubes' other expenses increased 45.3% year on year to Rs 52.30 crore, against 12.6% revenue growth. The presentation does not state what proportion of other expenses relates to electricity or when the full projected Rs 4.87 crore annual saving will be recorded.

How is Scoda Tubes performing during the expansion plan?

Scoda Tubes reported H1 FY27 revenue growth but lower operating profit and profit after tax. Revenue from operations rose 12.6% year on year to Rs 273.30 crore, while earnings before interest, taxes, depreciation and amortisation (EBITDA) declined 13.0% to Rs 31.80 crore and profit after tax declined 52.3% to Rs 10 crore.

Gross profit rose 15.9% to Rs 89.60 crore and gross margin increased to 32.8% from 31.8% in H1 FY27. However, employee benefit expenses increased 16.0% to Rs 5.50 crore, depreciation and amortisation rose 171.5% to Rs 8.90 crore, and finance costs increased 26.4% to Rs 13.40 crore. Profit-after-tax margin consequently declined to 3.7% from 8.7%.

Management says it is confident of achieving FY27 revenue growth of 20% to 25%, supported by its order pipeline, expanding manufacturing capabilities and execution. It has not provided margin guidance, saying its priority is to protect current margins and progressively build them through efficiencies and operating leverage. This is management's outlook rather than a reported result.

Which markets and products could Scoda Tubes serve with added capacity?

Scoda Tubes produces stainless-steel seamless pipes, seamless tubes, seamless U tubes, instrumentation tubes, welded tubes and welded U tubes for oil and gas, chemicals, fertilisers, power, pharmaceuticals, automotive and transportation. Its welded tubes and U tubes have stated outer diameters from 6.00 millimetres to 60.30 millimetres, thicknesses from 0.80 millimetres to 4.00 millimetres, and lengths of up to 18 metres for low-pressure applications.

Exports became a larger portion of Scoda Tubes' H1 FY27 revenue. Export revenue increased 59.4% year on year to Rs 112.90 crore, while domestic revenue fell 6.6% to Rs 160.40 crore, changing the mix to 41% exports from 29% a year earlier. The company reports presence in 32 countries and says it has served 349 clients globally to date.

Europe represented 30% of H1 FY27 revenue, India 59%, the Americas 9% and other markets 2%, according to Scoda Tubes. The company reports an audit completed for Rina Marine in Italy, with certification pending, and an application for Bureau Veritas Marine standards in France. It does not disclose customer commitments, revenue forecasts, project cost or expected utilisation specifically for the new welded capacity.

Conclusion

Scoda Tubes is pursuing a material expansion of welded-tube capacity, from 1,020 MTPA to a stated 21,150 MTPA, while maintaining a seamless operation supported by 20,000 MTPA of mother-hollow capacity. The captive solar project is intended to reduce electricity-cost exposure, with projected annual generation of 7.74 million kilowatt-hours and savings of approximately Rs 4.87 crore.

The next disclosed event is Q4 2027 trial production at the expanded welded facility, alongside commissioning of its dedicated solar capacity. Investors can watch whether Scoda Tubes clarifies the relationship between its 12,000-MTPA 2027E addition, FY28 capacity-chart figures and the 21,150-MTPA welded target, as well as progress toward management's FY27 revenue-growth outlook of 20% to 25%.