Venus Pipes & Tubes - In-line performance | Q1FY27 Company Update

Venus’ 1QFY27 was largely in line with our estimates. Revenue was strong, supported by a sharp rebound in domestic demand and high traction in welded pipes, while margins were stable on favourable product mix. Venus has a well-diversified robust order book of Rs 6bn, with strong traction from power, Chemicals, Oil & gas and exports. Additionally, Venus has announced a capex to manufacture spooling with an LOI from a data centre customer, in turn securing offtake. We expect new approvals from industries like Oil & gas, energy, hydrogen and nuclear, addition of new grades (titanium) & fittings and a rising traction from exports, to result in strong growth CAGR of 20%/ 23%/ 30% in Rev/ EBITDA/PAT over FY26-28E. However, exports are expected to remain weak until the Middle war resolves, which has led to cut in revenue estimates. We have downward revised our earnings by 8.8%/ 8.8% in FY27/FY28E respectively to account for the weakness in exports. We value Venus Pipes at 20x Jun’28E earnings (unchanged) to arrive at TP of Rs 1,775/share (previously Rs 1,830/share). The downward revision in TP is largely due to cut in earnings, partly offset by valuation roll forward. We have moved to Accumulate rating (BUY previously) for Venus due to a sharp rally in share price. Accumulate on dips.

Venus Pipes & Tubes Ltd. Stock Price Chart

Strong revenue momentum driven by welded pipe demand:

Venus reported +16% yoy revenue growth at Rs 3.2bn (in-line with our estimates), led by strong domestic demand and continued growth in welded pipes. The seamless pipes revenue grew 15% yoy to Rs 1.8bn; welded division posted growth of 21% yoy at Rs 1.3bn. The proportion of seamless pipes in the revenue mix stood at 55% (vs 55% yoy). Export revenues softened to Rs 937mn; -9% yoy due to war led disruptions and its share in revenue was 29% versus 37% yoy.

Steady margins; in-line EBITDA:

EBITDA margin was stable at 16.1%, mainly due to steady product mix. Venus recorded EBITDA at Rs 515mn (+15% yoy). Effectively, PAT stood at Rs 264mn, +7% yoy, due to high depreciation and finance cost.

Expansion into integrated solutions to drive next phase of growth:

Post the start of fitting and titanium welded pipes capacity, Venus has recently commissioned the remaining seamless tubes expansion, taking total seamless expansion to 6,000 MTPA along with equivalent backward integration through mother hollow pipes. The company has also announced ~Rs 700mn capex towards a dedicated spooling and fabrication facility, backed by a Rs 1.9bn LOI from a leading data centre customer executable over 15 months. Going forward, the share of value-added products is expected to increase due to these new projects, driving higher realizations and enabling broader use in specialized applications. Robust order book at Rs 6bn, ramp up of new capacities, addition of new grades and sizes, focus on exports, new approvals into oil & gas, chemicals, semiconductors, hydrogen and nuclear power (through titanium tubes) should drive a solid 20%/ 23%/ 30% CAGR in Rev/ EBITDA/ PAT over FY26-28E. However, exports are expected to remain weak until the Middle war resolves, which has led to cut in revenue estimates. We have downward revised our earnings by 8.8%/ 8.8% in FY27/FY28E respectively to account for the weakness in exports. Due to the sharp rally in share price, we have move to Accumulate rating. Advise accumulate on dips.

Valuation and rating:

We value Venus Pipes at 20x Jun’28E earnings (unchanged) to arrive at TP of Rs 1,775/share (previously Rs 1,830/share). The downward revision in TP is largely due to cut in earnings, partly offset by valuation roll forward. We have moved to Accumulate rating (BUY previously) for Venus due to a sharp rally in share price. Key risks: Delay in approvals, weakness in exports.

Company website: https://www.venuspipes.com/

*CMP is as per report published date

Click to download the full Venus Pipes & Tubes Ltd Q1FY27 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

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FAQs on Venus Pipes & Tubes Ltd Q1FY27 Company Update

These FAQs summarize key insights from MNCL’s institutional equity research on Venus Pipes & Tubes, highlighting growth drivers, outlook and key risks.

How did Venus Pipes perform in Q1FY27?

Venus Pipes reported 16% YoY revenue growth to ₹3.2 billion, broadly in line with estimates. Growth was supported by domestic demand and strong traction in welded pipes.

What drove Venus Pipes' revenue growth?

Domestic demand and welded pipe volumes were key contributors. Seamless pipe revenue grew 15% YoY, while the welded division grew 21% YoY.

What happened to Venus Pipes' margins?

EBITDA margin remained stable at 16.1%, supported by a favourable product mix. EBITDA increased 15% YoY to ₹515 million.

What is the Venus Pipes order book?

The company has a robust order book of approximately ₹6 billion, with demand across power, chemicals, oil and gas and export markets.

What are Venus Pipes' key growth drivers?

New seamless capacity, fittings and titanium welded pipes, value-added products, export growth and a dedicated spooling facility are expected to support the next phase of expansion.

What is the data-centre opportunity for Venus Pipes?

Venus has announced around ₹700 million of capex for a dedicated spooling and fabrication facility, backed by a ₹1.9 billion letter of intent from a data-centre customer.

What is the target price for Venus Pipes?

The supplied research report assigns a target price of ₹1,775 and an Accumulate rating. The target is an analyst estimate and does not guarantee future returns.

What are the key risks for Venus Pipes?

Key risks include weakness in exports and delays in obtaining approvals for new applications and markets.

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