Venus Pipes & Tubes IPO is a fresh issue of 5,074,100 equity shares of the face value of ₹10 aggregating up to ₹165.42 Crores. Venus Pipes & Tubes IPO has fixed a price band of Rs 310-326 a share for its initial public offering (IPO). Venus Pipes & Tubes Limited is a manufacturer and exporter of stainless steel pipes and tubes.
About Venus Pipes and Tubes Limited
Venus Pipes and Tubes Limited is a leading producer as well as exporter of stainless steel tubular products, including pipes and tubes made of stainless steel.
The manufacturing base of this company are in Kutch, Gujarat. This facility has 10,000 MT per annum of installed capacity.
Venus Pipes and Tubes Limited is manufacturing stainless steel tube products in two major categories – seamless tubes/pipes and welded tubes/pipes.
There are 5 product lines, namely stainless steel high precision & heat exchanger tubes, stainless steel hydraulic & instrumentation tubes, stainless steel seamless pipes, stainless steel welded pipes and stainless steel box pipes.
The products are sold under the brand name “Venus”. The products are supplied to different sectors, like engineering, chemicals, food processing, power, paper, fertilisers, oil and gas, pharmaceuticals etc.
These products are sold to customers through a network of independent sales representatives, company-operated retail stores, and distribution centres.
For exports products are sold directly to customers or through a network of distributors to 20 countries including countries in European Union, Brazil, UK, Israel etc.
The company is ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, certified by Bureau Veritas and holds accreditation from UK Accreditation Service. Further, its products sold to the European market are certified under PED 2014/68/EU and ADW/AD 2000 Merkblatt, W0 from TUV which is a requirement for supply in the European Union countries. Further, it is an IBR certified manufacturer and supplier of stainless steel seamless and welded pipes/tubes.
Issue Opens
Wednesday, 11th May, 2022
Issue Closes
Friday, 13th May, 2022
Issue Size (₹ Cr)
Fresh Issue of 5,074,100 Equity Shares
Face Value
₹ 10/- Per Share
Issue Size ( Rs. Cr)
₹ 157 – 165 Cr
Bid Lot
46 shares
Price Band
₹ 310 – 326
Issue Structure :
QIB
50% of the offer
NIB
15% of the offer ( 761,115 Shares, 24.81 Cr)
HNI-1 (2-10 L), 644 shrs, min appl. for 1x = 393
HNI-2 (>10 L), 3220 shrs, min appl. for 1x = 157
Retail
35% of the offer ( Approx.1,775,935 Shares ) (₹ 55.05~ – 57.90^ Cr)
Appl. for 1x Retail
~ 0.38 Lacs
Anchor Book
Venus Pipes & Tubes raised over ₹ 49 crore from three anchor investors ahead of its initial share sale. Nippon India Small Cap Fund, Kotak Mahindra Life Insurance Company Ltd & India SME Investments Fund are the investors which participated in the anchor book.
Venus Pipes & Tubes IPO: Financials
Item / ( Rs. in Crores)
2021(09)
2020(09)
FY21
FY20
Revenue from Operations
276.77
309.33
177.81
118.75
Revenue Growth (%)
–
73.97%
49.73%
–
EBITDA
35.51
34.78
11.64
8.29
EBITDA Margin (%)
12.83%
11.24%
6.54%
6.98%
Profit before Tax
31.7
30.95
6.49
4.95
Net Profit for the period
23.6
23.63
4.13
3.75
Net Profit Margin (%)
8.48%
7.57%
2.30%
3.11%
Equity Share Capital
15.22
8.73
8.73
8.73
RoNW (%)
43.18%
59.18%
25.36%
30.80%
Net Asset Value (₹ )
79.15
30.48
12.43
9.29
Post IPO Equity in cr
20.3
FV
10
IPO Price
326
EPS ( FY21)
11.64
PE FY21
28.01
EPS annaulized (9m FY22)
15.50
PE FY22 ann
21.03
Market Cap
662
Market Cap / Sales
1.79
Venus Pipes & Tubes IPO : Assessment
Domestic SS pipes and tube industry is expected to grow from about 1.1 million ton currently to 1.6 million ton by 2026, growing at CAGR 8.5%.
India remains a net importer of SS pipes and tubes. China is the largest exporter.
Chinese Government from May 2021, cancelled the export rebates on several steel products which also include welded and seamless steel pipes . This could partly explain good performance by company from FY21 onwards as this step benefits pipes and tubes manufacturers in India.
The basic raw material for manufacturing seamless pipe is hollow pipe which Venus Pipes & Tubes IPO procures from open market. The company plans to install a piercing plant wfor in-house manufacturing of hollow pipes as backward integration.
Further Government of India has decided to disallow international/global tenders in government procurement tenders up to the value of Rs 200 crore. This could help the company.
Venus Pipes is one of the growing brands in stainless steel pipes/tubes with presence in both seamless pipes and welded pipes/ tubes segments.
Proceeds from the 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 and for general corporate purposes.
Company’s manufacturing plant is strategically located about 50-75 km from Kandla and Mundra ports.
Comparison with Listed Peers
Company / Rs. Cr
Cmp
FV
Sales Fy21
Net Profit
P/E
RONW %
Makt cap rs. Cr
Market cap/sales
Venus Pipes & Tubes Ltd
326
10
309 cr
24
21.03 (28.01)
59.18%
662
2.14
Jindal Saw Ltd
81.7
2
10,664 cr
319
5.61
4.64%
2612
0.24
Ratnamani Metal & Tubes Ltd
2,325
2
2,298 cr
276
33.9
14.90%
10,862
4.73
At the higher price band of Rs 326, Venus Pipes & Tubes IPO offer is being made at around 21x times its annualized EPS based on 9mFY22 results.
The company is a small player and current markets are in bearish tone and this listing can go either way.
There could be speculative interest in the counter as it will be in 5% circuit on listing due to size of IPO.
As the IPO is small, so oversubscription is not issue and Venus Pipes & Tubes IPO got subscribed quite fast on opening.
New capacity addition is going to take time and IPO at this stage seems fully priced.
I may put a small application in Venus Pipes & Tubes IPO even as Iam neutral on short term prospects of company.
