The share price of one of the leading Stainless Steel Pipes and Tube manufacturers gained 8.2 percent to an intraday high price of 1,465.15 per share on Friday after DAM Capital initiated buy coverage on the stock with an upside of 29 percent.
On Friday, Venus Pipes & Tubes Ltd shares closed at Rs 1,405, up 3.73 percent from the previous close on the National Stock Exchange. The company has a market capitalization of Rs 2,868 crore.
Venus Pipes & Tubes Limited is a stainless steel pipe and tube manufacturer and exporter. The company manufactures two types of stainless steel tube products: seamless tubes/pipes and welded tubes/pipes.
The company’s shares have delivered a return of around 23 percent in six months and a multibagger return of 100 percent in a year.
The company’s revenue has climbed by 52 percent year on year, rising from Rs 126 crore in Q2FY23 to Rs 191 crore in Q2FY24. During the same period, net profit has increased by 100 percent from Rs 10 crore to Rs 20 crore.
DAM Capital has initiated the ‘Buy’ rating on Venus Pipes & Tubes Ltd for a target price of Rs 1,810 per share with an upside of 29 percent based on Friday’s close price of Rs 1,405 per share.
According to DAM Capital, Venus Pipes is building a niche market in the high-margin stainless steel pipes space. It is also an emerging contender in the stainless steel pipe sector with a strong desire for expansion, it noted.
According to the brokerage, Venus Pipes’s robust value chain and stable financial sheet would likely deliver a strong 60% profits CAGR in the future.DAM Capital also stated that a substantial capacity increase is under a strong desire for expansion and that asset sweating might begin.
In 2023, the company increased capacities for Welded Pipes from 8,400 MTPA to 24,000 MTPA and Seamless Pipes from 3,600 MTPA to 9,600 MTPA. Additionally, the company did backward integration of Seamless Pipes by installing capacities to manufacture 9,600 MTPA of Mother Hollow Pipes in May 2023.
Looking at the robust demand, the company in August announced to add a further 4,800 MTPA capacity for seamless pipes out of which 2,400 MTPA capacity is
operational. With this, the total capacity for Seamless Pipes will increase to 14,400 MTPA.
Venus Pipes’ overall sales increased 51.3% to 191.3 crore in the second quarter of the current fiscal. Sales of stainless steel seamless pipes increased by 153% year on year to 108.3 crore, while sales of welded pipes increased by 1.4% to 77.5 crore.
The Venus pipes export sales have grown at 49% CAGR from Rs 4.0 Cr in FY17 to Rs 29.8 Cr in FY23 and for H1FY24, export sales stood at Rs 36.2 Cr which was 131% higher than H1FY23.
The company has its manufacturing facility at Dhaneti in Kutch, Gujarat. The company’s notable clients include Amul, Asian Paints, ITC Limited, Larsen and Toubro, Torrent Power, and others. The company exports its products to more than 20 countries.
Written by Omkar Chitnis
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