Venus Pipes & Tubes Limited is one of the growing stainless steel pipes and tubes manufacturer and exporter in India having over six years of experience in manufacturing of stainless steel tubular products in two broad categories: (i) seamless tubes/pipes; and (ii) welded tubes/pipes, under which they are 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'). Under the brand name 'Venus', they supply the Products for applications in diverse sectors including (i) chemicals, (ii) engineering; (iii) fertilizers; (iv) pharmaceuticals, (v) power, (vi) food processing; (vii) paper; and (viii) oil and gas. Company has one manufacturing plant which is located at Bhuj-Bhachau highway, Dhaneti (Kutch, Gujarat) in close proximity, around 55 kilometers and 75 from the ports of Kandla and Mundra, respectively, that helps them in reducing the logistic costs on procurement of raw materials and imports and export of the Products. The Manufacturing Facility has separate seamless and welded divisions with latest product-specific equipment and machineries including tube mills, pilger mills, draw benches, swaging machines, pipe straightening machines, TIG/MIG welding systems, plasma welding systems, etc. As of February 28, 2022, the Manufacturing Facility has a total installed capacity of 10,800 MT per annum. Further, they have a storage facility at the Manufacturing Facility for the purposes of holding inventories of raw material as well as finished products, in addition to a warehouse facility located at Ahmedabad. The basic raw material includes SS coils and hollow pipes and they procure the raw materials based on market availability, pricing and quality through three main channels: (i) domestic suppliers such as steel manufacturers, stockists and traders; (ii) international suppliers from China, Indonesia, Malaysia and Singapore; and (iii) high sea purchases. The cost of materials consumed (including purchase of stock in trade and changes in inventory) by them in the operations accounted for 82.09%, 84.53%, 88.29% and 85.58% of the revenue from operations for the nine-month period ended December 31, 2021 and Fiscals 2021, 2020 and 2019, respectively. Company sells the Products both in the domestic as well as the international markets. In the domestic market, they sell the Products to customers as well as traders/stockists while in the international market they supply the Products through traders/stockists and authorized distributors that engage with them on an exclusive basis and certain marketing representatives. They started exporting the Products in the year 2017 and as on February 28, 2022 they have exported to 20 countries including Brazil, UK, Israel and countries in the European Union, etc. The revenues from exports aggregated to Rs 264.06 million, Rs 147.95 million, Rs 60.10 million and Rs 133.95 million for the nine - month period ended December 31, 2021 and Fiscals 2021, 2020 and 2019, respectively, and as a percentage of the revenue from operations, were 9.54%, 4.78%, 3.38% and 11.28%, respectively. As per financial performance, Venus Pipes has posted total income/net profits of Rs 120.50 Cr / Rs 3.75 Cr (FY19), Rs 179.32 Cr / Rs 4.10 Cr (FY20), Rs 312.03 Cr / Rs 23.66 Cr (FY21) and Rs 278.28 Cr / Rs 23.61 Cr (9M FY22). So company has posted good results. They have posted an average EPS of Rs. 10.55 and average RoNW of 43.18% for last three fiscals. Issue is priced at a P/BV of 4.12 as per NAV of 79.15 on 31.12.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 28 and as per FY22 annualised earnings P/E is around 21, which looks fully priced. As per RHP, comparison between listed players is shown in above table. On BRLM's front, One lead manager, SMC Capitals Market, is associated with this IPO, and has not handled any IPOs in last three fiscals. ( As on 03.05.22) As per financials, Venus Pipes has shown good growth, RoNW is 59.18% and P/E is respectively 28 and 21 as per FY21 and annualised FY22 earnings, which looks fully priced. The sector is showing good growth and company may grow at good rate for next couple of years. Also, there is very high competition in this sector. Current market condition is very volatile and IPO is fully priced, so we give NEUTRAL rating for this IPO and high risk taking investors may apply in this IPO.
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