Venus Pipes & Tubes: PAT growth of 99% & Revenue up 54% in 9M-24 at a PE of 41
Solid performance in 9M-24. Challenge is for the increased capacities and increasing utilization to drive the revenues and margins going forward in step with current valuations.
1. Manufacturer of stainless-steel pipes and tubes
venuspipes.com | NSE: VENUSPIPES
Revenue Split
Product split changing with an increasing contribution of seamless pipes.
2. PAT CAGR= 86%, Revenue CAGR= 47%, for FY19-23
YoY sequential growth over five years from FY19-23
3. Strong H1-24: PAT up 93% and Revenue up 55% YoY
4. Strong Q3-24: PAT up 107% and Revenue up 52% YoY
PAT up 15% and Revenue up 8% YoY
Expansion in PAT margins both YoY and QoQ
5. Strong 9M-24: PAT up 99% and Revenue up 54% YoY
Expansion in PAT margins
6. Solid return ratios
7. Strong outlook: Revenue CAGR of 35% till FY25
i. FY24: Revenue growth of 40-50%
Yes, see, the guidance, I think, we have to do that only as compared to FY'23. It was in the range of 40% to 50% only. And I think we stick to that.
ii. FY25: Revenue growth of 30-40%
See, FY'25, should be again a good year because many of the capacity would be utilized to a good extent. I believe the range bound of 30% to 40% from FY'24 if I compare.
iii. Order book: Revenue visibility for Q4-24
We have an order book of INR230 crores and the export is around 20% of that
Generally, it should be basically 90 to 110 days.
iv. Cash flow improvement from H2-24
Definitely a second-half will also see a much better operating cash flow as compared to what we have achieved in the first year but I think FY2025 would be a very good year, cash flow from operation should be there in good quantum.
8. PAT growth of 99% and Revenue up 54% in 9M-24 at a PE of 41
9. So Wait and Watch
If I hold the stock then one may continue holding on to VENUSPIPES
Coverage of VENUSPIPES was initiated after Q1-24 results. The investment thesis has not changed after a strong Q3-24. The delivery of a strong 9M-24 and the increased confidence in the management to deliver a stronger FY24
Outlook is positive
With all our capacities operational in May 2023 & July 2023 along with backward integration of seamless pipes, we anticipate not only sustaining but enhancing this positive trajectory
Improving demand environment globally & across India, we are optimistic of growth momentum to sustain going forward
Increased capacities and increasing utilization will drive the revenues and margins going forward
10. Join the ride
If I am looking to enter VENUSPIPES then
VENUSPIPES has delivered PAT growth of 99% and revenue growth of 54% in 9M-24 at a PE of 41 which makes the valuations acceptable.
Valuations are priced to perfection. PE of 41 for 40-50% top-line growth in FY24 followed by 30-40% growth in FY25 with bottom-line growing faster than the top-line
The performance for FY24 looks well discounted in the price. The opportunity in stock is from the performance and growth outlook from FY25 onwards.
A PE of 41 looks rich in the short term hence positions need to be built over time over bad days when the stock is not doing well.
Previous coverage of VENUSPIPES
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