Nuvama Reiterate ‘BUY’ on Venus Pipes with target price of Rs 2120

Venus Pipes reported in-line Q4FY25 results with revenue up 15% YoY while EBITDA/PAT fell 8%/7% YoY. Exports contribution shot up to 44% versus 12% in Q4FY24 while domestic share was down to 56%, hurt by soft demand. FY25 volumes expanded 18% YoY to 26,000 tonnes. Margins slipped 400bp YoY due to weak demand, slowdown in export of welded pipes and increased competitive intensity. Management guided for 20%-plus volume growth along with 16–18% margins. We believe given a strong order book (INR5.74bn) and expanding end-user categories, Venus is poised for strong growth ahead. Reiterate ‘BUY’ with a revised TP of Rs 2120 (earlier Rs 2000) as we roll forward valuation to 25x FY27E EPS.

Volume growth moderates; exports share up

FY25 revenue expanded 19% YoY (Seamless: +18%/Welded: +12% YoY) on the back of 17% YoY volume growth in FY25. Volume growth in seamless pipes was higher at 25% versus welded pipes at 10% YoY. Exports more than tripled in Q4FY25, soaring 312% YoY led by strong order inflows and higher market penetration in new geographies. Share of seamless/welded in Q4FY25 was 59%/35% (versus 55%/40% in Q4FY24). Though overall demand remains bleak, the company is reporting a demand pickup from the power sector. Venus has received an order worth Rs 1.9bn for a thermal power project for the supply of stainless-steel seamless boiler tubes.

Margins wane due to domestic market and competitive exports

EBITDA margins contracted 400bp YoY (+10bp QoQ ) to 16.1% owing to pressure from staff costs and other expenses. Weak domestic demand and lower share of welded pipe exports drove EBITDA margins downwards. Consequently, EBITDA decreased 7.6% YoY versus our estimate of 4% YoY fall. PAT contracted 5% YoY against our estimate of a 2% YoY reduction. The order book stood at Rs 5.75bn with 40% comprising exports.

Exports climbing up; value-added capacity on stream

Venus has improved its export mix to 44% led by network expansion in Europe, the US and Middle East. The process of obtaining approvals to penetrate further in the export and domestic markets is under way. The company recently commissioned operation of a new 3,600MT capacity for value-added products; fittings are likely to be commissioned in H1FY26. During the year, Venus received accreditation from NABL for its testing laboratory.