Ambit highlights that Venus Pipes Rev/EBITDA grew 17%/19% YoY, in line with their estimates. Recovery in domestic business (47% YoY) drove growth in Q4 FY26; exports declined 22% YoY as geopolitical issues cropped up. Management highlighted that remaining capacity additions are now done and made operational, including fittings. Management announced foray into Spooling Solutions with Rs 700 mn capex, backed by an LOI worth Rs 1.9 bn from a leading customer in Data Center segment. Company’s orderbook (ex-LOI) now stands at Rs 4.5 bn (2.5x YoY). Also, with entry into new-age sectors and fittings capacity becoming operational, management has strong performance visibility for the next few quarters. Company acquired additional 15 acres of land for future expansion. Ambit marginally trims their FY28 EBITDAM/PAT estimates by 40bps/3% due to increased investments in the business. Ambit builds 23%/30% rev/PAT CAGR over FY26-29E; better-than-expected execution in new products can drive upgrades. Ambit’s 24 Month Target Price TP of Rs 2,336 implies 27x FY28 EPS. Key takeaways from the earnings call Domestic business continued to be primary growth driver: Management highlighted that the domestic market continued to drive growth despite global uncertainties. FY26 volumes grew 15%, led by +15% growth in seamless pipes and 10% growth in welded pipes. Q4 FY26 volume grew by 2%. Blended realizations for FY26 were Rs65/kg. Demand remained healthy across key end-markets, including power, oil & gas, and chemicals.

Export business impacted amid global uncertainty: Export revenue contribution remained above 30% despite temporary weakness in the ME due to ongoing conflicts. Europe continued to be a strong volume driver, while demand from the US remained healthy. Management remains confident of sustaining 30- 40% export mix, supported by recently secured product approvals from leading global O&G companies across the US and Middle East.

Foray in data centre business: Management announced its entry into spooling solutions business, backed by Rs 1.85 bn LOI from a data centre client, executable over the next 15 months. Planned capex is at Rs 700 mn in a dedicated spooling and fabrication facility, with trial runs expected in 2QFY27 and commercial production commencing by mid-3QFY27. Management highlighted that this forward integration offers superior value addition and margin potential compared with standalone piping.

Order book remains healthy: The year-end orderbook stood at Rs 4.5 bn, with exports accounting for 30-40%. Apart from the regular order book, management has secured Rs 1.85 bn LOI for spooling solutions from a leading data centre client.

Capacity expansion update: Management highlighted that it has fully backward integrated for its 20,400 MTPA seamless pipe capacity through in-house mother hollow pipe manufacturing, ensuring raw material security and operational efficiency. It has also commissioned facilities to manufacture longer welded pipes. FY26 capacity utilization exceeded 95% for seamless pipes and stood at 60-65% for welded pipes. Additionally, the company has acquired 15 acres of land adjacent to its existing facility to support future expansion.

FY27 outlook remains robust Management guided for volume growth of over 20% in FY27, with margins expected to improve towards 17% in FY27 and further expand to 18% by FY28. Working capital days are expected to remain stable at 120-130 days, while FY27 capex is projected at Rs 0.9-1.0 bn. Beyond data centers and semiconductors, management also identified the PNG (Piped Natural Gas) segment as a potential new growth avenue.

Where do we go from here? Venus Pipes & Tubes has increased its capacity by 3.7x over FY23-26 to 43,800 MTPA. A quick ramp-up of new facilities has enabled the company to post significant volume growth across categories, which is expected to continue; condenser capacity commissioned recently is operating at 30% utilisation levels. While export growth momentum slowed in FY26, given the drop in US contribution and ME conflict, domestic business recovery through industries like power, O&G, and food processing businesses offset the same. With an orderbook of Rs 4.5 bn (30-40% exports), management expects momentum to continue across geographies, including recovery in the US business. Further, company has now entered into new-age categories (margin accretive) like data centers, solar manufacturing, and semiconductors; received LoI of Rs 1.85 bn from a leading customer in data center segment.

With previously announced capex now done, company has announced a capex of Rs 700 mn towards its spooling facility. Further, the company has also acquired 15 acres of additional land for future expansion. Management is confident about gaining market share on the back of its upcoming product launches and delivering +20% growth with 16-18% margin profile.

Ambit believes Venus is in the early part of the decadal growth opportunities, and there is a long runway for market-share improvement. However, high operating costs have hurt margins, partly because it is building its team and incurring upfront manufacturing costs to be market-ready for its upcoming products. With new investments announced, operational costs are expected to increase in near term. Ambit trims their FY28 EBITDAM/PAT estimates by 40bps/3%. Ambit unchanged TP of Rs 2,336 implies 27x FY28 EPS.

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