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IDBI Capital Report
Prince Pipes & Fittings Ltd.'s Q3 FY24 result was in-line with our estimate on net sales front, while margins disappointed. Subdued demand weighed on sales volume offtake, while price cut taken earlier quarters dented on net sales realisation in Q3 FY24.
Sales volume was at 42,665 million tonne, down by 2.4% YoY and NSR came in Rs 145/kg, lower by 10.3% over Q3 FY23.
The company reported inventory loss of Rs 100 million which further eroded operating margin. Bathware segment had a modest quarter with net sales of Rs 60 million.
The management guided that earnings improvement could be seen from Q1 FY25E. We believe capacity addition would play a pivotal role in earnings improvement in long run for Prince Pipes.
We introduce FY26E and maintain 'Hold' with a revised target price of Rs 789 (earlier Rs 798), assigning 35 times price earning ratio on FY26E.
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