
Shares of Prince Pipes & Fittings Ltd are down about 14 per cent since they hit 52-week high in January, earlier this year. The company's management is confident of achieving 15 per cent volume growth, along with 12–14 per cent margin in FY25 that can see an upside if the PVC price rally continues, leading to re-stocking and inventory gains, Nuvama Institutional Equities said.
The brokerage said Prince Pipes is on track to reduce receivables from mid-80s to 65–70 days in the near term and 60 days by Q3FY25. "We believe India’s real estate revival along with infrastructure push have paved the way for plastic pipe players. Retain ’BUY’ with an unchanged target price of Rs 830 based on 33 times FY26E EPS," Nuvama said.
The stock is down 11 per cent year-to-date. Nuvama's target price suggests a 23.80 per cent potential upside over Tuesday's closing price of Rs 670.40.
The brokerage said pipes sector is witnessing strong demand not only from the real estate and agri segment but also from infrastructure. Prince Pipes, it said, is focused on increasing market share by rationalising its pricing strategy and improving its supply chain (after ERP). Tailwinds and realignment of strategy should help in strong double-digit volume growth from Q1FY25.
Nuvama noted that container shortage and logistical issues, coupled with anticipation of ADD have pushed PVC prices higher. This has, in turn, led to channel stocking and some inventory gains, which would support margins.
"Prince has traditionally been strong in the north and west geographies. With the recent expansion at Jaipur, Telangana and now Bihar, it is moving towards having a pan-India capacity. Furthermore, de-bottlenecking at various location would drive growth," it said.
The management expects to break even in the bathware division within the next four–five quarters. Prince has launched the brand in the north and west, further expanding pan-India by H1FY25.
"Currently, 25 per cent of total sales come from projects consisting of PVC, CPVC and DWC pipes. In the last two–three years, Prince has made strong inroads into projects in various cities such as Ahmedabad, Pune, Hyderabad, etc and wants to further improve it, which would help achieve scale-based operating leverage," Nuvama that interacted with the Prince Pipes management said.