1 month ago
Geojit is bullish on Prince Pipes and Fittings has recommended buy rating on the stock with a target price of Rs 659 in its research report dated March 22, 2024.
Broker Research
March 22, 2024 / 12:13 PM IST
Buy
Geojit's research report on Prince Pipes and Fittings
Prince Pipes & Fittings Ltd. (PPFL) 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. 9MFY24 earnings hiccups already priced in, we reiterate our positive stance given a robust 30% CAGR in earnings over FY24E-26E. In 9MFY24, revenue declined by 6% YoY due to a 13% YoY realization drop, and volume grew only by a modest 7% YoY. The gross margin increased by 790bps 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 & 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.
Outlook
We anticipate EBITDA margins to be in the range of ~12.1-13.3% over FY24E-FY26E, driven by volume & ease in input cost. We value PPL at a P/E of 25x, as we roll forward to FY26E and reiterate to BUY with a target price of Rs.659.
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