Venus Pipes & Tubes IPO opens on Wednesday: 10 key things to know

Venus Pipes & Tubes Ltd, a manufacturer and exporter of stainless steel pipes and tubes, based in Gujarat, will launch its initial public offer (IPO) on May 11.

Here are 10 key things to know before subscribing to the issue.

1. IPO dates

The offer will open for subscription on May 11 (Wednesday) and the last day for subscription is May 13 (Friday).

2. Price band

The price band has been fixed at Rs 310-326 per equity share of face value Rs 10 each.

3. Offer details 

The manufacturer of seamless tubes/pipes and welded tubes/pipes plans to mop up Rs 165.42 crore through this offer at the upper end of the price band. The offer is a book-built issue and does not comprise any offer for sale of equity shares by the promoters.

The promoters will be offloading ~50.74 lakh shares, which comprises 16.07 percent of their stake. Their stake in the company will come down to 48.2 percent from the current 64.27 percent.

Fifty percent of the net offer will be reserved for qualified institutional buyers, 35 percent for retail investors, and the remaining 15 percent for non-institutional investors.

4. Objectives of the issue

 The company intends to utilise the net proceeds to meet long-term working capital requirement, general corporate purposes and to finance project costs for capacity growth, technology upgrades, operational cost optimisation, manufacturing facility support, and backward integration for hollow pipe manufacturing.

5. Lot size

Investors can bid for a minimum lot size of 46 shares and in multiples thereof. The minimum investment for a retail investor stands at Rs 14,996 and he can apply for up to 13 lots or 598 shares worth Rs 1,94,948. The maximum bid amount for retail investors has been capped at Rs 2 lakh.

6. Company profile and the industry

 The company has about six years of experience in manufacturing stainless steel tubular products in two broad categories — seamless tubes & pipes, and welded tubes & pipes. Under the brand name Venus, the company supplies its products for applications in diverse sectors, including chemicals, engineering, fertilisers, pharmaceuticals, power, food processing, paper and oil and gas. The company is one of the growing stainless steel pipes and tubes manufacturers in India.

It has one manufacturing plant at the Bhuj-Bhachau highway, Dhaneti (Kutch, Gujarat), with an installed capacity of 10,800 MT per annum. It sells its products in both domestic as well as international markets. As on February 28, 2022, it was exporting to 20 countries, including Brazil, the UK, Israel and countries in the European Union.

7. Financials

For FY21, the firm’s total income stood at Rs 312.03 crore against Rs 179.32 crore in the year-ago period. Net profit for the year was at Rs 23.63 crore, up from Rs 4.13 crore in the previous year. The profit margin was at 7.57 percent, up from 2.3 percent in the previous year. The company’s total borrowings were at Rs 78.19 crore, as on April 7, 2022.

8. Strengths and business strategy

The company has major international accreditations (quality benchmarking certifications) and product approvals, and this has enabled it to supply products to 57 Fortune India 500 companies in the past across sectors, including chemicals, engineering, pharmaceuticals, oil & gas, etc.

The company has been dealing only in specialised production of stainless steel pipes and tubes since inception. This gives it the benefit of segment expertise in the stainless steel pipes and tubes segments. This gives the company the benefit of segment expertise, thereby placing it in a position of advantage vis-à-vis its competitors.

The company has a multi-fold demand for its products from all segments of new projects, repair and maintenance as well as replacement demand.

Its key business strategy is to increase existing capacity and take advantage of the ‘make-in- India’ push by the government of India, which has decided to disallow international/global tenders in government procurement tenders worth up to Rs 200 crore.

Its objective of backward integration and cost optimisation will help improve its margins. The company plans to tap new geographies to increase the share of its export business while continuing to improve operating efficiencies through technology enhancements.

9. Promoters and key management personnel

Jayantiram Motiram Choudhary is the Chairman, Non-Executive Director and one of the promoters of the company.

Arun Axaykumar Kothari is a promoter as well as the Managing Director and CFO of the company while Megharam Sagramji Choudhary and Dhruv Mahendrakumar Patel are promoters and Whole-Time Directors.

10. Grey market, allotment and listing dates

The company’s shares are currently commanding a premium of Rs 20 per share in the grey market, according to IPO Watch. This implies a listing gain of 5 percent.

Shares will be allotted to successful bidders on May 19, and the refund to unsuccessful bidders will be credited to their accounts on May 20. The shares will be credited to the demat account by May 23 and the stock will debut on the bourses on May 24.

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