Venus Pipes & Tubes Limited IPO

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1) Venus Pipes is one of the growing stainless steel pipes and tubes manufacturers and exporters in India having over six years of experience in manufacturing of stainless steel tubular products in two broad categories:

a) seamless tubes/pipes.

b) welded tubes/pipes, under which they currently manufacturing five product lines, namely,

(i)  stainless steel high precision & heat exchanger tubes;

(ii) stainless steel hydraulic & instrumentation tubes;

(iii) stainless steel seamless pipes;

(iv) stainless steel welded pipes; and

(v) stainless steel box pipes (“Products”).

2) Under the brand name “Venus”, Company supply their Products for applications in diverse sectors including
(i) Chemicals
(ii) Engineering
(iii) Fertilizers
(iv) Pharmaceuticals
(v) Power
(vi) food processing
(vii) Paper
(viii) Oil and Gas.

3) Company’s Manufacturing Facility has separate seamless and welded divisions with the latest product-specific equipment and machinery including tube mills, Pilger mills, draw benches, swaging machines, pipe straightening machines, TIG/MIG welding systems, plasma welding systems, etc.

4) They sell their products both in the domestic as well as the international markets. In the domestic market, the company sells its products to customers as well as traders/stockists while in the international market they supply their Products through traders/stockists and authorized distributors that engage with us on an exclusive basis and certain marketing representatives

5) The company started exporting its products and have exported to 18 countries including Brazil, UK, Israel and countries in the European Union, etc. In order to increase its share in the international market, they have appointed sole distributors in overseas markets like Italy and Kuwait in addition to appointing marketing representatives for the European market.

6) Competitive Strengths

(i) International Accreditations and product approvals.

(ii) Specialised production of Stainless Steel Pipes and Tubes.

(iii) Multi-fold demand for our Products.

(iv) Customer Diversification.

(v) Experienced and Qualified Team.

Objects of the Venus Pipes & Tubes Limited IPO:

The Company proposes to utilize the Net Proceeds raised through the Issue for the following objects: 1. Financing the project cost towards capacity expansion, technological upgradation, cost optimization of the operations and support to the manufacturing facility and backward integration for manufacturing of hollow pipes; 2. To meet long-term working capital requirements; and 3. General corporate purposes, subject to the applicable laws
DRHP of Venus Pipes & Tubes Limited IPO
RHP of Venus Pipes & Tubes Limited IPO

Venus Pipes & Tubes Limited IPO Details:

Open Date: May 11 2022
Close Date: May 13 2022
Total Shares: 5,074,100
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue
Issue Size: 165.4 Cr.
Lot Size: 46 Shares
Issue Price: ₹ 310-326 Per Equity Share
Listing At: NSE,BSE
Listing Date: May 24 2022

Promoters And Management:

Jayantiram Motiram Choudhary, aged thirty-eight (38) years is the chairman, non-executive Director and one of the Promoters of the Company. He has been associated with our Company since its incorporation as a Director. He does not have any formal education degree. He has over ten (10) years of experience in the steel industry and over four (4) experience as a director of Accuracy Shipping Limited Arun Axaykumar Kothari, aged forty-four (44) years is the Promoter, managing Director and CFO of the Company. He has been associated with the Company since September 14, 2021 as a Director. He holds a bachelor’s degree in commerce from Rajasthan University and has been a qualified chartered accountant since 1998. He looks after and manages the entire accounting and financial operations of the Company and is responsible for setting processes, systems and procedures in place to control and streamline the financial and commercial transactions of the Company. Megharam Sagramji Choudhary, aged thirty-nine (39) years is the Promoter and whole time Director of the Company. Being the Promoter, he has been associated with the Company since its incorporation. He has no formal education degree. He has over fifteen (15) years of experience in the stainless steel welded pipes and tubes industry. He is responsible for sales and marketing, customer relationship management and procurement and also looks after the HR activities of the Company.

Financials of Venus Pipes & Tubes Limited IPO:

 
Particulars (in crores) 9MFY22 March 21 March 20 March 19
Revenue from operations 276 309 177 118
Cost of materials consumed 257 210 158 105
Purchase of Stock in Trade 6 52 6.6 0
Changes in inventories -36 -1.7 -8.4 -3.7
Employee benefits expense 4.2 3.2 2.6 2.5
Other expense 10 9.8 6.5 6.2
Operating Profit 34.8 35.7 11.7 8
OPM% 13% 11% 6% 6%
Finance Cost 4.2 5.5 4.5 3.1
Depreciation 1 0.9 2.1 1.9
Other Income 2 2.7 1.5 1.7
Profit (Loss) before tax 31.6 30.9 6.4 4.9
Tax Expenses 8 7.8 1.5 1.2
PAT 23.6 23.6 4.1 3.7
No.of shares 2 2 2 2
Earnings per share 11.8 11.8 2.1 1.8

Comparison With Peers:

Name of the Company Face Value EPS (in Rs) PE PAT (In Cr.) Mcap (in crores)
Venus Pipes & Tubes Limited 10 15 21.7 30 600
Listed peers
Jindal Saw Limited 2 14.67 6.18 469 2,899
Ratnamani Metal & Tubes Limited 2 68.52 32.9 320 10,547

Recommendation on Venus Pipes & Tubes Limited IPO:

Review and Recommendation of  Venus Pipes IPO by InvestorZone is 5/10 1. During FY19-21, it has grown well with sales CAGR of 61% to Rs300 Crores and EBITDA CAGR of 105% to Rs 35 Crores in FY21. The EBITDA margins also improved from ~7% in FY19 to ~12.8% in 9MFY22. 2. It has a manufacturing plant with capacity of 10,800 Tonnes Per Annum of SS pipes and tubes at Gujarat. The capacity utilisation has improved from average 61% in FY19 to 92% in FY21. This shows that demand is coming for the SS pipes in the market. Venus is also planning to increase the capacity from 10,800 Tonnes to 24000 Tonnes per annum. Same will be funded from IPO proceeds. 3. It is also planning to setup backward integration of by setting up piercing plant with capacity of 9600 Tonnes Per Annum. This will help Venus in manufacturing hollow pipes from SS round bars which is raw material for seamless pipes. Currently, Venus buys hollow pipes from market. This will save cost in long run. 4. Venus Pipes has ROE and ROCE of 59% and 36% respectively. 5. Asking P/E is 21x on the basis of TTM of FY22. This looks fairly priced. 6. 15-20% listing gains might happen in this IPO.

Lead Manager of Venus Pipes & Tubes Limited IPO:

  1. SMC Capitals Limited

Registrar of Venus Pipes & Tubes Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Venus Pipes & Tubes Limited Survey No. 233/2 and 234/1, Dhaneti Bhuj, Kachchh - 370020 Gujarat Phone: +91 2836 232 183/84 Email: cs@venuspipes.com Website: https://www.venuspipes.com/

Discussion on Venus Pipes & Tubes Limited IPO:

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