Venus Pipes soars 9% to new high on foray into fittings, capex of Rs 175 cr

Shares of stainless steel pipe maker Venus Pipes & Tubes soared 8.6 per cent to a new record high of Rs 1,889 on BSE after the company announced its foray into fittings business and laid out capacity expansion with a capex of Rs 175 crore. 

At 11:11 am, the stock was trading 5 per cent higher on paring early gains. Though, with today's rally, it is now up 30 per cent in the last one month. 

Further, as part of the capacity expansion, it will introducte a specialized product line of stainless and titanium welded tubes. The capex of Rs 175 crore will be used to set up its first fittings plant and for seamless and welded pipes/tubes (new product). 

Of the announced capex, 40 per cent will be funded from issuing warrants to certain promoter and non-promoter investors on a preferential basis. A total of 420,000 warrants will be issued aggreagting Rs 71.4 crore. 

Rest 60 per cent that is Rs 103.6 crore will be funded from term loans from banks and via internal accruals, it said. 

Both the fittings business and the new product line of stainless and titanium welded tubes will be high-teens margin businesses, as per the company. 

The company said it is diversifying its product portfolio to encompass a wide selection of fittings, which are essential components in piping systems for the connection and control of fluids or gases in industrial environments. 

"Fittings complement our existing pipes business and will enable us to offer complete PFF (Piping, Fittings & Flanges) solutions to various industries. The new specialized product line of stainless and titanium welded tubes is aimed at enhancing our competitive edge and profitability. These strategic initiatives are poised to improve ROCE, enhance profitability, and drive sustainable growth," said Arun Kothari, MD, Venus Pipes. 

The new product line of stainless and titanium welded tubes involves high precision engineering, making this specialised line difficult for other players to enter into, the company said. 

"These value-added tubes are crafted to meet demanding industrial requirements. The company will manufacture both – Hygienic stainless steel and titanium grade tubes to diversify into sectors with critical application such as food processing, pharma, nuclear and power. This will create new avenues for our revenue growth and profitability," it said in a filing. 

Meanwhile, the phase 1 of the capex will involve setting up value-added fittings and welded tubes to be completed by March 2025 with a cost of Rs 115 crore, remaining Rs 60 crore will be used for value-added fittings, welded pipes and tubes to be completed by December 2025.