Robust order book strengthens earnings prospect…
About the stock: Venus Pipes and Tubes (VPT), established in 2015, is engaged in manufacturing of stainless-steel pipes and tubes with total installed capacity pegged at ~48,000 metric tonnes per annum (MTPA), located in Gujarat.
• Within this, it has a capacity of, 20,400 MTPA- Seamless stainless-steel pipes and tubes and 27,600 MTPA- Welded stainless steel pipes tubes.
Q1FY27 performance: Venus Pipe reported a steady performance in Q1FY27. Consolidated topline stood ₹321 crore (up 16% YoY, 6% QoQ). Reported EBITDA stood at ₹52 crore with corresponding EBITDA margins at ~16% (down 22 bps QoQ). Consolidated PAT for the quarter stood at ₹26 crore (up 7% YoY).
Investment Rationale:
• Capacity expansion led growth to support long-term earnings growth: Stainless steel pipes and tubes, known for their corrosion resistance and lightweight properties, are gaining traction across core infrastructure applications. The domestic stainless-steel pipes and tubes industry is expected to grow at 6-8% CAGR over FY24-29E, as per industry sources. VPT has capitalised on this opportunity by expanding its capacity ~4x over the past five years, from 12k MTPA in FY23 to current 48k MTPA. Notably, seamless pipes and tubes capacity has increased ~6x to 20.4k MTPA, strengthening its presence in higher-margin segment and increasing its market share to ~10% in FY26 (vs sub ~5% in FY20). Further, the commissioning of a 20.4k MTPA hollow pipe facility has strengthened backward integration, reducing dependence on external sourcing and supporting margin expansion. Consequently, VPT delivered strong Sales and PAT CAGRs of ~32% and ~34%, respectively, over FY22-26.
• Expanding into high-value applications; data centre offers a key growth opportunity: VPT is expanding its end-market exposure towards high- growth sectors such as data centres, semiconductors, and nuclear power, thereby reducing its dependence on traditional cyclical industries. The strategy is already gaining traction, with VPT securing a Letter of Intent worth ₹185 crore from a leading data-centre customer for the supply of stainless-steel spools for cooling applications, to be executed by Dec’26. Along with this, the current order book of ~₹600 crore (vs ~₹450 crore in Q4FY26) supported by from power, engineering, chemicals, oil & gas and engineering and the recent commissioning of fittings capacity will increase the contribution of value-added products and supporting margin expansion. Accordingly, VPT’s EBITDA margin is expected to improve from ~16% in FY26 to ~17% by FY28E (in line with slated guidance).
Rating and Target Price: We maintain a positive view on Venus Pipes and Tubes, supported by healthy double-digit volume-led earnings growth over the medium term, along with increasing presence in high-growth segments such as Data Centre, along with a growing portfolio of niche value-added product offerings, a controlled B/S (0.4x D:E) and return ratios >15%. On that note, we reiterate a BUY rating on stock with a target price of ₹2,200, i.e. 30x PE on FY28E.
