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Shares of Venus Pipes fell 21 percent in one session from their record high; where is the stock headed?

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    Shares of Venus Pipes &Tubes Ltd have slipped 21% from their all-time high in a single session. The maker of stainless steel pipes and tubes hit an all-time high of Rs 1579.15 on October 7, 2023. However, the stock fell to an intraday low of Rs 1245.50 today. On a yearly basis, Venus Pipes shares have zoomed 100% and gained 74% in 2023. In the current session, Venus Pipes stock opened lower at Rs 1301 on BSE. It slipped 4.64% to hit an intraday low of Rs 1245.50 on BSE. Total 9,379 shares of Venus Pipes changed hands amounting to a turnover of Rs 1.18 crore on BSE. The market cap of the firm fell to Rs 2538.23 crore. Venus Pipes stock has a one-year beta of 0.3, indicating very low volatility during the period.

    In terms of technicals, the relative strength index (RSI) of Venus Pipes stock stands at 40.6, signaling it's trading neither in the overbought nor in the oversold zone. Venus Pipes shares are trading lower than the 5 day, 20 day, 50 day, 100 day but higher than the 150 and 200 day moving averages.

    Here’s a look at what brokerages and analysts said on the outlook of the stock.

    Centrum Broking is bullish on the stock and has assigned a buy call to Venus Pipes for a target of Rs 1809.

    “The backward integration and capacity expansion to play a pivotal role in cost saving, product acceptance in export market as well as enhance profitability. We have high conviction on company and expect Revenue/EBITDA/PAT to grow by 46%/74%/82% CAGR over FY23-25E along with margin expansion from 12.5% in FY23 to 18% in FY25. We recommend BUY on Venus Pipes with target price of Rs 1809,” said the brokerage.

    Nuvama Institutional Equities is also bullish on the stock with a target of Rs 1686.

    “Venus Pipes is well-placed to drive solid earnings growth with a PAT CAGR of 54% over FY23–26E led by tripling of capacity driving revenue CAGR at 32% and EBITDA margin expansion by 600 bps from 12.5% in FY23 to 18.5% by FY26E. A strong balance sheet despite heavy capex (D/E of 0.2x) and FCF (post capex) beginning FY25E are key positives for the stock. Reiterate ‘BUY’ with a target price of Rs 1,686 based on 23 times Q2FY26E EPS,” said the brokerage.

    Deven Mehata, Equity Research Analyst at Choice Broking said, “Venus Pipes stock is presently trading at Rs 1250 levels, having experienced a decline from its recent high of Rs 1578. On the weekly chart, the stock showed significant upward momentum, moving from breakout levels of Rs 860 to reach Rs 1578 without substantial corrections. However, in the last three weeks, it has undergone a correction and is nearing a crucial support level at Rs 1130, which also aligns with the 0.618 Fibonacci retracement level, suggesting potential price stability. The Relative Strength Index (RSI) indicator, a measure of momentum, has retreated from overbought levels of 96 to a more neutral position around 50. This shift indicates a possible easing of the stock's bullish momentum. Looking ahead, the stock may encounter resistance near Rs 1375 levels, which also coincides with its 20 and 50-day Exponential Moving Averages (EMA)”.

    Vaishali Parekh, AVP- Technical Research & Analysis at Prabhudas Lilladher said, "The stock has witnessed a decent rally from Rs 720 zone to touch the peak zone of Rs 1580 levels gaining almost 120% in six months which is quite significant and thereafter has retraced almost 40% of the rally. The stock has witnessed a decent correction and has breached the support zone of Rs 1260 level, weakening the overall bias. The next major support would be at around Rs 1140 levels below which the trend would turn bearish anticipating for further slide. At current levels, for the bias to improve, it has to cross above at least Rs 1,360 levels to turn the bias positive."

    Abhijeet from Tips2trades said, “Venus Pipes has been bearish but also oversold on the Daily charts with next support at Rs 1140. Only a daily close above the resistance of Rs 1270 could lead to a target of Rs 1488 in the near term."

    Venus Pipes and Tubes logged a 91.2 percent year-on-year (YoY) rise in the quarterly net profit at Rs 17.4 crore. Revenue climbed 58.1 percent YoY to Rs 179.6 crore for Q1FY24 compared to Rs 113.6 crore in Q1FY23. The company's earnings-before-interest-taxes-depreciation and amortization (EBITDA) margins rose 40 basis points to 15.8 percent in the quarter under review.

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