Monday, May 20, 2024

Bonanza Wealth Management Research gives Subscibe Rating to IPO of Venus Pipes & Tubes Ltd

In its Research Report, Bonanza Wealth Management Research has given Subscibe Rating to the IPO of  Venus Pipes & Tubes Ltd with positive reasons given in this article.

The price band of  IPO of Venus Pipes & Tubes Limited  has  been fixed at ₹31v0 to ₹326 per equity share. The public issue worth ₹165.42 crore is going to hit primary market on 11th May 2022 and it will remain open for bidding till 13th May 2022. The
company is offering 5,074,100 shares of the company to generate ₹165.42 crore through fresh issue.The company will use these ₹165.42 crore for for financing the project cost towards capacity expansion and backward integration for manufacturing of hollow pipes.

As per Red herring Prospectus of Venus Pipes & Tubes IPO, bidding for anchor investors will begin on 10th May 2022 A bidder will be able to apply for the public issue in lot and one lot will comprise 46 shares of the company.

Venus Pipes & Tubes is one of the growing stainless steel pipes and tubes manufacturers and exporters in India having over six years of experience in manufacturing stainless steel tubular products in two broad categories, viz, seamless SS pipes & tubes and welded SS pipes & tubes at its state of art i manufacturing facility located in  Kutch, Gujarat, which is strategically located at around 55 KMs and 75 KMs from Kandla and Mundra ports, respectively.

Venus Pipes & Tubes has current production capacity of 10,800 MTPA, of which 3,600 MTPA is dedicated to seamless SS pipes and 7,200 MTPA for welded SS pipes. It has plans to expand its seamless capacity to 9,600 MTPA and welded capacity to 14,400
MTPA. As a result, total capacity would increase by more than double from 10,800 MTPA to 24,000 MTPA. In addition to 9,600 MTPA of new capacity, the company is also
looking for backward integration to manufacture hollow pipes. Venus Pipes & Tubes is
expanding its existing manufacturing capacity for welded pipes & tubes and seamless
pipes & tubes for manufacturing higher diameter welded pipes/ tubes (upto 1219.2
mm) and seamless pipes/ tubes (upto 168.3 mm), to gain competitive advantage over its peers.

The various initiatives for infrastructure development under the PM Gati Shakti will
propel the demand of steel in various sectors thereby enhancing steel usage and growth of the SS pipes & Tubes. This will help domestic SS pipes & tube industry to grow from about 1.1 Mn tonnes currently to 1.6 Mn Tonnes by 2026, growing at CAGR 8.5%. Venus Pipes & Tubes has started exporting its products in 2017 and to increase share in the international market, it has appointed sole distributors in Italy and Kuwait and a marketing representative for servicing European market. 

During the past 2 years, revenue of Venus Pipes & Tubes grew at a CAGR of 61.4% while PAT grew at a CAGR of 151.0% in same period.

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