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Venus Pipes & Tubes Limited

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Venus Pipes & Tubes Limited (“Venus Pipes”) was incorporated on February 17, 2005. Venus Pipes is a pipes and tubes manufacturer with the sole focus on manufacturing of welded and seamless pipes in a single metal category, i.e., stainless steel.

* The company manufactures stainless steel tubular products in 2 broad categories: (i) seamless tubes/pipes; and (ii) welded tubes/pipes.

* Under their brand name “Venus”, they supply their Products for applications in diverse sectors including Chemicals, Engineering; Fertilizers; Pharmaceuticals, Power, Food Processing; Paper; and Oil and Gas.

* Venus Pipes has one manufacturing plant which has separate seamless and welded divisions with latest product-specific equipment and machineries. As of February 28, 2022, their Manufacturing Facility has a total installed capacity of 10,800 MTPA. They are proposing to expand their existing manufacturing capacity for welded pipes/tubes and seamless pipe/tubes.

* As of February 28, 2022 they have exported their products to 20 countries including Brazil, UK, Israel and countries in the European Union, etc.

Outlook & Valuation: The company has grown well in the last three financial years due to improvement in the commodity cycles and high steel prices. The company’s current capacity utilization is above 90% and the company expects to more than double its capacity using the IPO proceeds. Further, they also plan to set up a piercing line for manufacturing of hollow pipes with the capacity of 800 MT per month, as their backward integration strategy. With the piercing plant, they will be able to produce hollow pipes from SS round bar. Their products are largely used in industries like pharmaceuticals, food processing, etc. The GoI has announced Production Linked Incentive (“PLI”) schemes for boosting the domestic manufacturing in certain sectors, which shall have a consequent positive impact on their order book. And schemes like Make in India, Atmanirbhar Bharat that focus on indigenous manufacturing augur well for the company. China export rebate cessation and BIS norms provide industry tailwinds. The company has priced the issue at a P/E of 21.03 based on annualized numbers of FY 22 which is slightly above its industry median P/E. Further, the commoditized & cyclical nature of the business and small issue size makes this issue suitable for aggressive investors only with long term view

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