"The growth triggers like volume expansion, higher exports, import substitution, margin expansion etc will enable EBITDA/PAT increase by 46%/48% CAGR over FY22‐FY25E. Besides, the proposal to bring anti‐ dumping duty on imports of stainless steel products is being evaluated by DGTR, if imposed, could turn to be big positive for Venus Pipes," the brokerage said in a note.
Key highlight is continuous improvement in direct sales to 67% (vs 55% in Q1) of total sales which is catalyst for sustainable higher margins in future. Management will re‐align its export strategy post expansion in Q1FY24E, it highlighted.
“The ongoing capex is on track, expanding capacity by 3x by Q1FY24 to augur expected 32% CAGR volume growth over FY22‐25E. We are maintaining our estimates unchanged. On strong earning visibility for Revenue/EBITDA/PAT to grow at 32%/46%/48% CAGR over FY22‐FY25E, we increase our target price to ₹848," said Centrum while maintaining its Buy rating on the newly listed stock.
During the quarter, Venus Pipe announced ₹500 mn capex to setup new welded tube mill capacity and it will increase welded pipe capacity from 8400tpa to 24000tpa and expected to be completed by June 2023 end.
“Venus will be among few manufacturers in the world and only player known having tube mill facility in India. The tube mill will help to manufacture welded products faster and will be able to manufacture stainless steel LSAW pipes," the brokerage note added.
Venus Pipes shares made their stock market debut in May this year and the newly listed stock has given multibagger return by rallying more than 103% in the last six months since its listing on the stock exchanges, from its initial public offering (IPO) issue price of ₹326 per share to currently hovering over ₹665.
The Gujarat-based company is a growing stainless-steel pipes and tubes manufacturer and exporter in India. The company, under the brand name Venus, supplies its products for applications in diverse sectors, including chemicals, engineering, fertilizers, pharmaceuticals, power, food processing, paper and oil and gas.
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