Prince Pipes & Fittings Ltd. share price target

Prince Pipes and Fittings (PRINCPIP) has reported Q4FY23 revenue decline of 15.2% YoY with pipe volumes declining 2.1% YoY (4-year CAGR of 2.8%) and realisation down 13.3% YoY as PVC prices corrected. EBITDA/kg improved 110.5% QoQ to Rs33.5/kg (+7.9% YoY) due to inventory gains and improved product mix.

We recently interacted with the management of Prince Pipes and Fittings (PRINCPIP).
The management indicated that in the ongoing quarter (Q4FY23), plumbing demand
remained healthy, but agri demand has started picking up from end-Mar’23 only,
which will thus, result in a muted quarter YoY.

Prince reported strong volumes and fragile margins, while the EBITDAM and PATM saw decline in YoY and improvement in QoQ (-690 bps/-500 bps and 1,160 bps/880 bps YoY/QoQ respectively). In Q3 FY23, despite an inventory loss of ?25-30Cr, the company reported an improvement in the margins on QoQ basis on the back of 35% growth in volumes and ?13 per kg growth in price.

Prince Pipes and Fittings (PRINCPIP) reported a better than expected Q3FY23 pipe volume growth of 34.7% YoY (3-year CAGR of 12%) on a low base. Demand was driven across segments (infrastructure, plumbing and agri) and by dealer restocking, as PVC prices stabilised at the end of the quarter.

Pipe demand has improved from December as PVC prices have started stabilising post FY-TD correction of ~35%. The company expects at least double digit volume growth in H2FY23.