Analysts at Nuvama Research recently interacted with Arun Kothari, Managing Director of Venus Pipes and therefore in a report the brokerage highlighted that Venus is on track to treble capacity to 33.6 ktpa by Q1FY24E. It believes that strong balance sheet despite heavy capex and FCF (post capex) beginning FY25E are the key positives for the company.
Further, the company is confident of ramping up capacity utilisation led by a capex upswing in end-user industries, imposition of ADD on imports from China, push for BIS-certified products driving import substitution and backward integration driving exports and has focus on direct sales, backward integration and higher diameter pipes shall help expand margins.
“We believe aggressive capacity addition and Venus Pipes’ thrust on value addition would boost its bottom-line growth. Venus has been improving its profitability by beefing up its direct sales and lifting the share of seamless pipes. With upcoming capacity in both welded and seamless, we expect market share gains for the company. Accordingly, we reckon Venus would close the gap with the leader on margins and returns. All in all Maintain ‘BUY’ with a target price of ₹1,024,” it said.
“Venus is well-placed to drive superior PAT growth of 64% over FY23–25E led by tripling of capacity, driving a revenue CAGR of 34% and EBITDA margin uptick of 500 bp from 12.6% in FY23E to 17.6% by FY25E,” it added.
Venus Pipes shares made their stock market debut in May last year and the stock has given multibagger return by rallying more than 116% in the last 10 months since its listing on the stock exchanges, from its initial public offering (IPO) issue price of ₹326 per share to currently hovering over ₹720, implying a 40% upside potential from current stock level.
The Gujarat-based company is a growing stainless-steel pipes and tubes manufacturer and exporter in India. The company, under the brand name Venus, supplies its products for applications in diverse sectors, including chemicals, engineering, fertilizers, pharmaceuticals, power, food processing, paper and oil and gas.