Venus Pipes gains 6% as Himalaya Finance buys 5 mn shares via open market

On December 1, 2022, Himalaya Finance & Investment Company purchased 5 million shares, representing 2.5 per cent of total equity, of Venues Pipes via block deal

Shares of Venus Pipes & Tubes moved higher by 6 per cent to Rs 723.80 on the National Stock Exchange (NSE) in Friday's intra-day trade after Himalya Finance & Investment Company bought 5 million shares of the company via open market on Thursday.

The stock of the price of iron & steel products company recovered 12 per cent from Thursday's intra-day low of Rs 644.55. It had hit a record high of Rs 775 on November 9.

On December 1, 2022, Himalaya Finance & Investment Company purchased 5 million shares, representing 2.5 per cent of the total equity, of Venues Pipes via block deal, NSE data shows. The shares were purchased at Rs 650.42 apiece, data shows.

Individual investor, Manojsingh Jadoun sold 664,397 shares of the company at an average price of Rs 651.76 per share, data shows. CLICK HERE FOR FULL DETAILS

Venus Pipes & Tubes has been involved in the manufacturing of Stainless Steel (SS) pipes and tubes used across multiple industries. The company has its manufacturing facility located on Bhuj-Bhachau highway near Dhaneti (Kutch, Gujarat) which is also in the vicinity of ports of Kandla and Mundra. The total manufacturing capacity of the company, currently, is 12,000 MTPA. It is currently undertaking capex to more than double the manufacturing capacity.

The company made market debut on May 24, 2022.  It issued shares at a price of Rs 326 per share.

Venues Pipes' sales to direct domestic consumers have increased by 136 per cent on a year-on-year (YoY) basis and contributed around 62 per cent of total revenues in H1FY23. Exports sales were impacted during the September quarter on account of geo-political tensions and inflationary environment, especially in the European market.

The management believes that this is temporary in nature and exports should start picking up post FY23. "With revival of capex cycle in India leading to robust demand for our products across End User Industries, the planned capacity expansion will give us an edge and will help to capture more market share," the management said.

Meanwhile, on November 24, CRISIL Ratings reaffirmed its 'CRISIL BBB+/Stable/CRISIL A2' ratings on the bank loan facility of Venus Pipes and Tubes.

"The rating reflects its promoter's extensive experience in SS pipe business, increasing scale of operations along with healthy operating margins and healthy financial risk profile. These strengths are partly offset by competitive and fragmented nature of industry and large working capital requirement," the rating agency said.

The company is planning to more than double its existing capacity along with addition of hollow pipe manufacturing unit in current fiscal which will support the growth in revenues going ahead over medium term. However, timely completion of capex and successful ramp up in operations will continue to remain monitorable, CRISIL said.

The operating profitability has also improved significantly over fiscal 2022 and fiscal 2021 to around 11.7-13 per cent from a low of around 6-6.7 per cent during fiscal 2019 and fiscal 2020. The same has been supported by increasing scale of operations and better margin orders executed by the company. Also, with installation of hollow tune manufacturing unit, company will benefit from backward integration leading to sustenance of healthy operating margins going ahead, the rating agency said.