Should you book profits in Venus Pipes & Tubes?

New Delhi: After a lukewarm listing on the stock exchanges, shares of Venus Pipes & Tubes hit the upper circuit of 5% on Tuesday, taking the overall gain to 9% above the issue price.

The company was listed at Rs 337.5, a slight premium of 4% on the National Stock Exchange (NSE), over its issue price of Rs 326. On BSE, it was listed at a premium of 3 % at Rs 335.

However, as the issue is smaller (less than Rs 200 crore), the company has been listed in the ‘T’ segment, which means investors can only sell the meter after taking delivery on their demat account.

Venus Pipes and Tubes is a manufacturer and exporter of stainless steel pipes and tubes in two major categories: Seamless Tubes/Pipes and Welded Tubes/Pipes.

This IPO got a mixed review from analysts, and analysts still remain divided. Some of them suggest investors exit the counter after quoting the pop, while others suggest holding some of it for a longer period.

Saurabh Joshi Research Analyst at Marwadi Financial Services believes that the counter had a better quote than expected and recommends investors to exit the counter.

“The company has negative operating cash flow and geographic concentration of revenue,” he added. “Given the overall market outlook and company fundamentals, we advise investors to exit and avoid any new investment.”

The issue received a strong response as it was globally subscribed 16.31 times. The unit reserved for qualified institutional buyers was subscribed 12 times while the HNI unit was subscribed 15.66 times. The commercial part was booked 19.04 times.

Just a day before the IPO, the company commanded a premium of Rs 35-40 on the gray market, signaling a strong quote for the metal pipette maker.

Astha Jain, senior research analyst at Hem Securities, advised investors to book partial profits and hold the remaining part for the long term.

Mohit Nigam, Head – PMS, Hem Securities said that after making a positive debut on the exchanges, Venus Pipes continues to be in positive territory. “Investors with a long-term view should stay invested,” he added. “However, those looking for listing gains should stay invested with a stop loss of Rs 326 and book profits of around Rs 370.”

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)