Prince Pipes Q4 Results Review - Market Share Gain, Healthy Margins Are Keys To Re-Rating: Systematix

Systematix Research Report

Prince Pipes and Fittings Ltd.’s Q4 (pipe volume up 16% YoY; Ebitda margin 12.5% and Rs 18.2 /kg) came broadly inline with our estimates. Volume growth was driven by all the three verticals and key polymers (PVC, CPVC). High receivables was due to demand surge in March 2024 (should normalize in one-two quarters). Pipe volume grew 10% YoY in FY24 (likely maintained market-share).

Prince Pipes is now competitive across segment and geography after price rationalization measures. Active efforts in solidifying channel network, strengthening brand equity, and new product launches should drive market share gain FY25 onwards (by outgrowing 15% industry growth).

Focus remains on to reduce working capital cycle. Pan India manufacturing presence, after Bihar plant is operational in Q4 FY25, will also drive volume and margins. Total addressable market for Prince Pipes has expanded to ~Rs 600 billion spread over pipes, water tanks and bathware. Aquel acquisition will drive robust growth in the bathware segment.

We increase FY26E earnings by 6% owing to higher volume growth and margin expectations. We now estimate 18%/29%/30% CAGR in revenue/Ebitda/PAT over FY24-26E, on healthy volume (16% CAGR) and margin expansion, resulting in improving operating cash flow and return on capital employed (~21%).

At ~24 times FY26E P/E on current market price, we maintain Hold rating with a revised target price of Rs 723 (26 times FY26E P/E, earlier Rs 679 at 26 times). Strong volumes/margins are keys for a re-rating.

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