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Geojit Research Report
Prince Pipes and Fittings Ltd. is one of the leading manufacturers of plastic pipes in India, with 5.5% of the overall market share. Products are marketed under the brand names: Prince Piping Systems and Trubore.
9M FY24 earnings hiccups already priced in, we reiterate our positive stance given a robust 30% compound annual growth rate in earnings over FY24E-26E.
In 9M FY24, revenue declined by 6% YoY due to a 13% YoY realisation drop, and volume grew only by a modest 7% YoY.
The gross margin increased by 790 basis points YoY due to lower input costs, although from a lower base. However, Ebitda margin expansion was constrained to 12.2% due to higher costs and ERP implementation.
Going ahead, healthy demand from construction and plumbing, a strong summer, better pricing actions and stable input prices will drive volumes.
Acquisition of bathware brand ‘Aquel' complements the existing product portfolio, will foster growth.
We anticipate Ebitda margins to be in the range of ~12.1-13.3% over FY24E-FY26E, driven by volume and ease in input cost.
We value Prince Pipes at a price/earning of 25 times, as we roll forward to FY26E and reiterate to Buy with a target price of Rs 659.
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