Venus Pipes & Tubes Limited is a company that is engaged in the manufacturing of stainless steel pipes and tubes. The company also carries out the export of the same. Let’s delve deep into understanding some key elements about the Venus Pipes & Tubes Limited IPO.
The business of the company has been categorized into two main categories:
- seamless tubes and pipes
- welded tubes and pipes
The company manufactures both the products in five different categories. It is:
- stainless steel high precision & heat exchanger tubes
- stainless steel hydraulic & instrumentation tubes
- stainless steel seamless pipes
- stainless steel welded pipes
- stainless steel box pipes.
Venus Pipes & tubs Limited manufactures in their manufacturing plant. It is located at Dhaneti in Kutch, Gujarat. The capacity of the plant is 10,800 metric tons per annum. The company exports its products to 18 countries. It includes Brazil, European Union, the UK, and Israel. The company has an experience of over six years of. Venus Pipes & Tubes Limited has a market presence in diverse sectors, including chemicals, engineering, fertilizers, pharmaceuticals, and power. The company’s product is also used in the food processing industry, paper, and oil & gas industry. The company is currently carrying out its CAPEX plan. It also stated that their overall capacity would increase to 24000 MT per annum post-completion.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the loans of the company. It will be done on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
- The company also has an objective to fund its CAPEX Plan. The company wants to expand its existing manufacturing unit capacity. It also intends to develop new facilities. The company intends to carry out a technology upgradation.
- The company also intends to fund various investments. It also holds a vision for strategic acquisitions.
- To carry out an operational cost optimization. It also wants to create a backward integration to manufacture hollow pipes.
BASIS OF THE OFFER:
The basis of the IPO offer of the company is as follows:
- The company holds solid accreditations. It also has quality approval for its products on a global scale.
- The company’s specialty is the manufacturing of the Stainless-Steel Pipes and Tubes.
- The products of the company have demand in various sectors.
- It also holds a diversified client base.
- Venus Pipes & Tubes have a well-trained workforce. It has skilled professionals in engineering, operation, and management department.
VENUS PIPES & TUBES LIMITED IPO DETAILS:
Venus Pipes & Tubes Limited is a company with its headquarters in Kachchh. The company recently got approval from SEBI. It earlier filed its DRHP for approval. The company is coming up with its IPO offer of 50,74,100 equity shares.
The company stated that it would utilize funds as below:
|Financing funding requirements for CAPEX Plan. The company aims to increase its capacity expansion. It also wants to do technology up-gradation along with cost optimization||Rs. 107.95 crores|
|Working capital||Rs. 25.00 crores|
|General corporate purpose||Remaining funds|
The company fixed the price band to Rs. 310.00 – Rs. 326.00 per equity share. The company is aiming to raise funds of Rs. 165.42 crores. At the upper cap. Post allotment, the company’s shares will be listed on BSE and NSE. The IPO issue offer constitutes 25.0 % of the post issue fully paid-up equity capital base of the company. Post IPO offer, the fully paid-up equity capital of the company will increase. It will increase from Rs. 15.22 Crores to Rs. 20.30 crores. On the upper band of IPO, the company’s market share will be Rs. 661.65 crores.
|IPO Opening Date||May 11, 2022|
|IPO Closing Date||May 13, 2022|
|Issue Type||Book Building Type Issue IPO|
|Face Value||Rs. 10 per equity share of the company|
|IPO Price Band||Rs. 310 – Rs. 326|
|Market Lot||One lot of 46 equity shares of the company|
|Minimum Order Quantity||One lot corresponding to 46 equity shares of the company|
|Minimum Order Price||Rs. 14,996|
|Maximum Order Quantity||13 lots corresponding to 598 equity shares of the company|
|Maximum Order Price||Rs. 194,948|
|Listing At||BSE, NSE|
|Issue Size||50,74,100 equity shares of the company that corresponds to Rs. 165.42 Crores|
|Fresh Issue||50,74,100 equity shares of the company that corresponds to Rs. 165.42 Crores|
|Offer for Sale||0|
|Basis of Allotment Type||% Of the Offer been allotted by IPO|
|Qualified Institutional Buyer||50|
|Price Band Announcement:||May 05, 2022|
|Anchor Investors Allotment:||May 10, 2022|
|Basis of Allotment Date||May 19, 2022|
|Initiation of Refunds||May 20, 2022|
|The Credit of Shares to Demat Account||May 23, 2022|
|IPO Listing Date||May 24, 2022|
STRENGTHS AND OPPORTUNITIES OF VENUS PIPES & TUBES LIMITED IPO:
- Venus Pipes & Tubes Limited have a team of professionals engaged in a different sector. The company has an experienced promoter base with quality individuals.
- The company holds quality control accreditations. It has achieved this from Bureau Veritas and has UK Accreditation Services. The company has also obtained ISO quality standards certification. It earned accreditation for ISO 9001:2015, 14001:2015, and 45001:2018.
- The company has a separate production plant for manufacturing its products. One plant is for seamless pipe, while the other is for manufacturing the welded pipe.
- The company has a strong market reach. It has a deep rotted client and customer base. The company’s products have been used in both local and international markets.
- Venus Pipes and Tubes limited has a strong network and distribution system. It has achieved it with its authorized dealers and suppliers.
- The company has an excellent stacking ability. It has helped them maintain its inventory days better than its peer.
- Venus Pipes and Tubes limited is aiming for its growth strategy of setting up a new plant along. It has also made plans to enter into a product line that will boost the company’s financial growth.
- The company has they’re in – house dedicated quality and control team. It has helped them attain quality assurance and proficiency in operations.
- Rising trends in commodity and multi-folded demand for their product line have helped the company achieve a super performance.
- Recently Venus Pipes & Tubes Limited has appointed a sole distributor in their overseas markets. It will help the company to achieve better global reach. The company’s focus is to expand its business in the European market.
- On the financial front, the company recorded outperforming numbers.
- The CAGR of the company has been 61%.
- The EBITDA CAGR of the company in the same period was 105%.
- The EBITDA margins of the company have increased to 12.8%.
- An increase in capacity utilization from 61% to 92% last year.
- Planning to set up backward integration of piercing plant.
- Venus Pipes & Tubes Limited has a Return on Equity of 59 %. It also recorded a ROCE of 36%.
RISKS, WEAKNESSES, AND THREATS:
- The company is engaged in tough competition. Any failure in the operations, design, and growth strategy can negatively impact the company.
- Venus Pipes and Tubes Limited is vulnerable to uncertainties in demand. The company has always faced problems of lack of long-term commitment.
- Another important threat is limited operational risk. It will be a negative driver for the company.
- The products of the company can become obsolete.
- The company is also vulnerable to protecting its intellectual property. It is subject to claims that the firm infringe.
- Venus Pipes and Tubes Limited is highly dependent on its top ten clients. A significant amount of revenue is from these clients only.
- The company is also vulnerable to the forex rate and supply chain demand. It is also vulnerable to its raw material’s availability and pricing and distribution network performance.
- Venus Pipes and Tubes Limited has to follow guidelines to maintain its quality and operations accreditations strictly.
FINANCIAL TRENDS OF VENUS PIPES & TUBES LIMITED IPO:
|Particulars||For the year ending with the amount as in Rs. in crores|
|30 June 21||31 March 21||31 March 20||31 March 19|
|Profit After Tax||9.10||30.95||6.49||4.95|
|PARAMETER||MARCH 21||MARCH 20||YoY %|
|Earnings Per Share (Rs)||27.06||4.73||472.48|
|Book NAV/Share (Rs)||45.73||18.64||145.34|
|Tax Rate (%)||23.65||36.36||-34.96|
|Core EBITDA Margin (%)||11.24||6.54||71.78|
|EBIT Margin (%)||11.80||6.21||90.09|
|Pre – Tax Margin (%)||10.01||3.65||174.30|
|PAT Margin (%)||7.64||2.32||229.07|
|Cash Profit Margin (%)||7.95||3.51||126.65|
|Asset Turnover (x)||2.53||1.91||32.39|
|Sales/Fixed Asset (x)||15.07||12.64||19.28|
|Working Capital/Sales (x)||8.04||9.45||-14.93|
|Fixed Capital/Sales (x)||0.07||0.08||-16.17|
|EV/Net Sales (x)||0.14||0.26||-47.78|
|EV/Core EBITDA (x)||1.11||3.50||-68.12|
|Net Sales Growth (%)||73.97||49.73||48.74|
|Core EBITDA Growth (%)||184.97||30.87||499.23|
|EBIT Growth (%)||230.69||37.05||522.61|
|PAT Growth (%)||472.48||10.08||4587.31|
|EPS Growth (%)||472.48||10.08||4587.31|
|Total Debt/Equity (x)||0.94||2.62||-64.13|
|Current Ratio (x)||1.49||1.27||17.86|
|Quick Ratio (x)||0.93||0.64||44.68|
|Interest Cover (x)||6.57||2.42||170.87|
COMPARISON WITH PEERS OF VENUS PIPES & TUBES LIMITED IPO:
|Name of the Company||Face Value||EPS of the company as in Rs||PE||PAT of the company as in Rs. Crores||Market capitalization of the company as in Rs. in crores|
|Venus Pipes & Tubes Limited||Rs. 10||Rs. 15||21.7||Rs. 30 Crores||Rs. 600|
|Jindal Saw Limited||Rs. 2||Rs. 14.67||6.18||Rs. 469 Crores||Rs. 2,899|
|Ratnamani Metal & Tubes Limited||Rs. 2||Rs. 68.52||32.9||Rs. 320 Crores||Rs. 10,547|
PROMOTERS OF VENUS PIPES & TUBES LIMITED IPO:
The promoters of the company are as follows:
- Megharam Sagramji Choudhary
- Jayantiram Motiram Choudhary
- Dhruv Mahendrakumar Patel
- Arun Kothari
|Pre-Issue Share Holding||64.27%|
|Post Issue Share Holding||48.20%|
Survey No. 233/2 and 234/1,
Dhaneti, Bhuj, Kachchh
370020 Gujarat, India.
Tel: +91 2836 232 183/84
Selenium, Tower B, Plot No- 31 and 32, Financial District,
Hyderabad, Rangareddi 500 032, Telangana, India.
Tel: +9140 6716 2222
LEAD MANAGER(S) OF VENUS PIPES & TUBES LIMITED IPO:
- SMC Capitals Limited
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