Venus Pipes IPO recommendations: Analysts give thumbs up amid bleeding market

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Venus Pipes IPO opens today amid troubled market conditions. The offer of stainless steel pipe manufacturer comes on the heels of recently-concluded LIC IPO which is India’s biggest IPO. Since the IPO is quite small at INR165.4 crore, not many brokerage houses have shown interest in it. Nevertheless, most Venus Pipes IPO recommendations are positive. Head to the Venus Pipes IPO page to get more details about the offer.  

BP Wealth has a positive view on Venus Pipes IPO and sees upside, thanks to reasonable pricing. “Backward integration with in-house production of hollow pipes, acquisition of slitting machine for cutting steel strips/coils as per desired width and enriched product mix with higher diameter pipes would lead to continued improvement in margins. At the upper end of the price band, the issue is valued at a P/E of 21x based on FY22 annualized earnings, which we believe is reasonably priced. Hence, we recommend a SUBSCRIBE rating on this issue for the long term,” said its research team in the IPO note.

Another positive word came from Canara Bank Securities which finds merit in the company’s capacity expansion and backward integration by setting up a piercing line for manufacturing of hollow pipes. “The company is backed with increasing commodity prices environment that is likely to reflect in their margins. It is also supported by the growth of the industry that it serves backed with favourable government policies. We recommend a subscribe for long term for the company,” noted its research report.

Ventura Securities added to positive Venus Pipes IPO recommendations. In its note, the brokerage house mentioned that the new capacities will be ready by the end of FY2023. “With strong potential for revenue growth due to upcoming expansion plan and scope for further improvement in profitability, we recommend SUBSCRIBE for long term gains,” opined its research note.

Citing the company’s healthy financials with double-digit EBITDA margin, reasonable debt, strong capacity expansion plans, diverse customer base, and attractive valuations, Reliance Securities has a subscribe rating. The brokerage added that backward integration is likely to help in cost-saving going forward.

Bonanza Wealth Management is also positive on the upcoming IPO. “With one of the growing SS pipes and tubes manufacturers and exporters in India, production capacity increase to 24,000 MTPA, backward integration to manufacture hollow pipes and government initiative to boost demand, we are recommending SUBSCRIBE to the IPO of Venus Pipes & Tubes Ltd,” said its IPO note while adding the Chinese Government’s cancellation of the export rebates on several steel products should act as a tailwind for domestic pipes and tubes manufacturers.

Highlighting its s fair valuations compared with its peers, GEPL Capital has assigned a Subscribe rating to the IPO. Similarly, Hem Securities has also given thumbs up to the IPO further adding to positive Venus Pipes IPO recommendations.

Venus Pipes IPO recommendations: Some caution warranted

Samco Securities said the IPO’s valuation does not seem very expensive. “However, the fact that the company is quite small in size and has no major competitive advantage in its segment does raise some concerns,” feels the brokerage house while adding, “Considering all these factors and the current market scenario, investors with a decent risk appetite may SUBSCRIBE WITH CAUTION.”

Another word of caution came from Marwadi Financial Services which has a negative view on the IPO. “We assign ‘Avoid’ rating to this IPO as the company has negative operating cash flows and geographic concentration of revenues as 3 states contribute more than 90 per cent to domestic revenues,” added its IPO note.

While Venus Pipes IPO recommendations are positive and it continues to trade at a premium in informal grey market, current market conditions definitely warrant some caution for short term.

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