Venus Pipes & Tubes shares list with marginal gains, stocks rise 3.5% over IPO price

Venus Pipes & Tubes Ltd shares marked a tepid listing on the stock exchanges today while the benchmark indices were seen dancing between gains and losses. Venus Pipes shares began trading at Rs 337 per share on NSE, up 3.53% from the upper end of the IPO price band of Rs 310-326 per share. On BSE, the shares were trading at Rs 335 apiece. Venus Pipes IPO was offered to investors in the primary market earlier this month where the public issue garnered a strong response. The issue was entirely a fresh issue of equity shares. 

Venus Pipes & Tubes’ Rs 165 crore IPO was subscribed by investors 16.31 times earlier this month. 50% of the issue was reserved for Qualified Institutional Buyers (QIB) who bid for their portion 12.02 times. Non-Institutional Investors (NII) had 15% reservation and bid for their portion 15.66 times. Retail investors subscribed to their portion of the issue 19.04 times. The IPO was subscribed fully on the very first day of sale. 

Through the funds raised via the IPO, Venus Pipes & Tubes will look towards capacity expansion, technological upgradation, cost optimization of operations and support the manufacturing facility and backward integration for manufacturing of hollow pipes. 

“Considering the FY21/FY22 (Annualised) EPS of Rs 11.64/Rs 15.50 on a post-issue basis, the company is going to list at a P/E of 28.00x/ 21.03x with a market cap of Rs 6,617 mn whereas its peers namely Jindal Saw and Ratnamani Metals & Tubes are trading at P/E of 5.99x and 31.74x,” said analysts at Marwadi Financial Services. The brokerage had an ‘Avoid’ rating on the issue as the company has negative operating cash flows and geographic concentration of revenues. Holding similar views on valuations, analysts at Anand Rathi had earlier said that when compared to its listed peers, Venus seems to be richly priced. Anand Rathi had an Avoid Rating on the issue.

Analysts at Hem Securities, however, had positive views with a ‘Subscribe’ rating. “Company is bringing the issue at price band of Rs 310-326 per share at p/e multiple of 21x on 9 Months FY22 EPS basis. Company with international Accreditations and product approvals is specialized in production of Stainless-Steel Pipes and Tubes with multi-fold demand of its Products & Customer Diversification.Hence we recommend “Subscribe” on issue,” Hem Securities had said earlier. 

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