Shares of Venus Pipes & Tubes hit a new high of Rs 586.65 on the BSE, as the stock rose 11% in intraday trade on Tuesday, buoyed by a good business outlook. Shares of the company, which have risen 47% in the past two weeks, said on September 10, 2022, that it had become the first Indian company to receive approval from the Bureau of Indian Standards (BIS) for stainless steel seamless and welded pipes.
Shares of the steel products company are currently trading at their highest levels since going public on May 24, 2022. The stock is up 80% from its issue price of Rs 326 per share. The stock hit a 52-week low of Rs 316.40 on June 1, 2022.
With the capacity expansion plan, backward integration to improve efficiency, and a wide range of products suitable for applications in multiple industries, the management is optimistic about future growth; coupled with the trust and brand building for “Venus”, the company is confident that it can seize a larger market share in the future.
Venus Pipes & Tubes is a pipe and tube manufacturer specialising in welded and seamless pipes in the single metal category of stainless steel (SS). The company supplies its products under the Venus brand and is used in various industries, including chemical, engineering, fertiliser, pharmaceutical, power, food processing, paper, and oil and gas. Venus Pipes raises Rs 165 crore initial public offering (IPO), and proposes to use net proceeds to finance project costs for capacity expansion, technology upgrades, operating cost optimisation and backward integration of hollow tube manufacturing, totalling Rs 108 crore. The company also aims to meet long-term working capital requirements of Rs 25 crore and balance general corporate purposes.
China is India’s largest exporter of stainless steel pipes, accounting for 54% of total imports in fiscal 2021. From May 2021, the Chinese government has removed export tax rebates (13%) for seamless steel pipes and other steel products to encourage Chinese steelmakers to focus on the domestic market. The move is expected to benefit Indian pipe makers as Chinese steel prices rise.
The removal of export tax rebates will encourage Chinese steelmakers to turn to the domestic market and reduce the domestic production of various exported steel products. Additionally, Venus Pipes said in its FY22 annual report that all projects in the country are now limited to BIS-certified products, which could lead to import substitution.
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