VENUS PIPES AND TUBES
Author: Anuj Shah Posted on 11 May 2022 16:44:27
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IPO Opening Date
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May 11, 2022
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IPO Closing Date
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May 13, 2022
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Issue Type
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Book Built Issue IPO
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Face Value
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₹10 per equity share
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IPO Price
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₹310 to ₹326 per share
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Market Lot
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46 Shares
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Min & Max Order Quantity
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46 & 598 Shares
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Min & Max application amount
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₹ 14,996 & ₹194,948
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Listing At
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BSE, NSE
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Issue Size
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5,074,100 shares of ₹10 (aggregating up to ₹165.42 Cr)
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Fresh Issue
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5,074,100 shares of ₹10 (aggregating up to ₹165.42 Cr)
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Basis of Allotment Date
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May 19, 2022
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Initiation of Refunds
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May 20, 2022
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Credit of Shares to Demat Account
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May 23, 2022
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IPO Listing Date
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May 24, 2022
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Promoter
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MEGHARAM SAGRAMJI CHOUDHARY, JAYANTIRAM MOTIRAM CHOUDHARY, DHRUV MAHENDRAKUMAR PATEL AND ARUN
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Retail portion QIB
NII(HNI)
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35%
50%
15%
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Registrar
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KFIN TECHNOLOGIES PRIVATE LIMITED
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Venus Pipes & Tubes Limited is a manufacturer and exporter of stainless steel pipes and tubes. The company is manufacturing stainless steel tube products in two broad categories - seamless tubes/pipes and welded tubes/pipes under which five categories of products are manufactured namely, stainless steel high precision & he exchanger tubes, stainless steel hydraulic & instrumentation tubes, stainless steel seamless pipes, stainless steel.
- Proceeds from the public issue will be used for financing the project cost towards capacity expansion and backward integration for manufacturing of hollow pipes.
- To meet working capital requirements.
- General corporate purposes.
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Particulars (in cr)
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Dec-21
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Mar-21
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Mar-20
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Mar-19
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Total income
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278.28
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312.031
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179.322
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120.506
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Total Income growth
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-10.83%
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74.01%
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48.81%
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~
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EBITDA
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35.512
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34.776
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11.636
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8.294
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EBITDA Growth
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2.12%
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198.87%
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40.29%
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~
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EBITDA Margin (%)
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12.83
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11.24
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6.54
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6.98
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PAT
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23.595
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23.632
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4.128
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3.75
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PAT Growth
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-0.16%
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472.48%
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10.08%
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~
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PAT Margin (%)
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8.48
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7.57
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2.3
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3.11
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Debt to Equity ratio
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0.42
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0.94
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2.62
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2.42
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Comparison with Listed Industry Peers :
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Name of the company
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Venus Pipes
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Ratnamani metal &Tubes Ltd
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Jindal Saw
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Total Income (in cr)
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312
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2341.52
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10872
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Face Value per equity share
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10
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2
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2
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PE
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-
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32.6
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9.43
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EPS (Basic)
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18.04
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59.07
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10.02
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EPS (Diluted)
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18.04
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59.07
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10.02
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Ronw(%)
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59.18%
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13.90%
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4.69%
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NAV per equity share
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30.48
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425.35
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218.39
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Company supplies its Products in overseas markets such as the European Union, Brazil, United Kingdom, Israel etc. The revenues from exports aggregated to ₹ 48.13 million, ₹ 147.95 million, ₹ 60.10 million and ₹ 133.95 million for the three-month period ended June 30, 2021 and Fiscals 2021, 2020 and 2019, respectively and as a percentage of our revenue from operations, were 5.94%, 4.78%, 3.38% and 11.28%, respectively. The decline in revenues from exports Fiscal 2019 to Fiscal 2020 was on account of unfavorable market conditions persisting in the European market during that period. Although it has not experienced such downward fluctuations in our revenues on a regular basis, there can be no assurance that fluctuations on account of unfavorable market conditions shall not occur in the future.
- The company faces competition , including from other large and established competitors, and they may fail to compete against existing or new competitors, which may reduce the demand for their products.
- It faces certain challenges because of limited operating history in the highly competitive stainless steel pipes and tubes market, which may affect company's future performance.
- Demand in the steel and steel products industry is volatile and a decrease in demand of steel may have an adverse impact on its business, operations and financial conditions.
- Company’s raw material cost constitutes significant percentage of its total expenses.
- Company relies heavily on its manufacturing facility in Kutch, Gujarat and any adverse developments in the region could have an adverse effect on its operations, financial performance and business.
- Company’s existing international operations and plans to expand into additional overseas markets is subject to various business, economics, political, regulatory and legal risks.
On valuation front ,during FY19-21, company has grown well with sales CAGR of 61% to ₹309 Cr nd EBITDA CAGR of 105% to ₹34.8 Cr in FY21. During 9MFY22, it has already surpassed FY21 numbers and recorded EBITDA of ₹35.5 Cr. The EBITDA margins improved from 7% in FY19 to 12.8% in 9MFY22. Blended EBITDA/t inched up sharply from ₹19,813/t in FY19 to ₹38,906/t in Q1FY22 As a result, profit after tax increased by 94% CAGR to ₹27.2 Cr. Significant higher earnings improved return ratios. ROE improved sharply from 31% in FY19 to 59% in FY21 while ROCE improved from 14.7% in FY19 to 36% in FY21.
The company is proposing to expand existing manufacturing capacity for welded pipes/ tubes and seamless pipes/tubes for manufacturing higher diameter welded pipes/tubes (up to 1219.2 mm) and seamless pipes/tubes (up to 168.3 mm), to gain competitive advantage over its competitors. What will drive the additional demand for the product of company is recently announced Production Linked Incentives (PLI) Schemes by the Government of India. It is expected to boost domestic production in the pharmaceuticals, food processing and automobiles sectors translating into a better order book for the company.
Offer is available at P/E of around 28-30x in FY21 , which when compared to other listed peers is lower than industry. Nonetheless, what makes the issue investable is its future growth prospects. Company’s earnings is going to increase in next few years on back of volume expansion (capacity increasing from 10,800tpa to 24,000 tpa), improved customer mix shifting sales from stockiest to direct sales/tender based, backward integration and improving operating efficiencies, hence we recommend “Subscribe to the issue for the long term “
DISC
ALIMER