Venus Pipes seems to be very well-poised to grow from here with multiple levers of variant perception playing out:
- ~60% volume growth for FY24
- 300 bps of Margin Expansion due to backward integration and other cost savings
- Promoter buying
- Favorable Product mix change with share of premium segment (Seamless) becoming higher
- Anti- Dumping duty for imports from China further aiding the
- Shift from unorganised to organized- currently there are just 3 major organised players in this segment of the market with 30% share. The remaining 70% belongs to the unorganised.
In terms of anti-thesis:
- The valuations are no more cheap with PE of 35x for FY24 earnings, some of the growth has already baked in to the share price
- Difficult to figure out the longevity of earnings beyond FY25
Any thoughts?
Disc: Biased and Invested
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