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Stainless steel foams are produced via powder metallurgy process taking acicular urea as space holder contributing porosity with 40-70 volume %. The resulting changes in microstructure of compact after each operation comprising cold compaction, pre-heating and sintering are discussed along with causes with the help of SEM micrograph. The processed foam samples using 40 % urea by volume are quite regular and acicular in shape but with increase in porosity regularity starts diminishing. It is observed that the foam samples with 40 % porosity doesn’t show any plateau stress as in aluminum foams but those with 50 % porosity (approximately 80 MPa maximum plateau stress) and 60 % porosity (approx.45MPa) shows plateau region in true stress-strain diagram during compression test due before final densification process. It is observed that with increasing porosity plateau stress decreases, since lesser force is required to densify the foam. Therefore the stainless steel foams with low porosity can be used in light weight high strength applications e.g. structures whereas with high porosity have impact energy absorbing applications e.g. damping elements in buildings or vehicles, etc.