After March quarter results came out on Monday, shares of Prince Pipes went up by 9%. Analysts said that the sales miss made up for the margin surprise. Analysts said that because Prince Pipes is switching to a global ERP system, June will be a slow quarter for the company. They suggested price goals for the stock between Rs 700 and Rs 900, with most targets at the lower end of the range.
The stock is aimed at Rs 707 by YES Securities. Because plumbing and agriculture were doing well, the agency thought that demand for PP&F would stay strong for the next few years. Over FY23–FY25E, it thinks that its volume will grow by 13% per year on average. The brokerage, on the other hand, thinks that the June quarter will be affected, so the market growth from one year to the next in FY24 will be small.
We anticipate an ASP of Rs 172 per Kg and an Ebitda per Kg of Rs21/Rs22 in FY24/FY25, with PVC prices remaining relatively stable. At CMP, the company is worth 36 times FY24 EPS of Rs 17 and 26 times FY25 EPS of Rs 24. We gave the company a value of Rs704 based on FY25E EPS multiplied by 30. So, our ADD grade on the stock stays the same.
The same Rs 703 goal is set by ICICI Securities. This brokerage said that overall profitability was better than expected in Q4FY23. After the ERP implementation hiccup in Q1FY24, ICICI Securities thinks that demand will pick up in the plumbing, infrastructure, and agriculture industries, and that profits will return to normal.
JM Financial has changed its expectations for FY24-25 and set a goal of Rs 730. It continued to keep a
Positive view of the stock because “it is well positioned to ride the real estate recovery, product diversification, brand building efforts, improving the enterprise business (tie-up with Lubrizol), and distribution reach.”
Prabhudas Lilladher said that Price Pipes’ performance should keep getting better as long as the company focuses on growing capacity utilisation, charging more for its services, and making more free cash flow.
We anticipate a volume CAGR of 12.2% and an Ebitda margin of 14.5% in FY25E, with a Sales/EBITDA/PAT CAGR of 12.4%/41%/60.1% from FY23 to FY25. We changed our goal price from Rs 693 to Rs 716. This is based on 25 times FY25E EPS, which is 10% less than its average historical PE. Maintain ‘BUY’.
Nuvama Institutional Equities said it is sticking to its theory of volume growth and staying optimistic about the stock. We are reducing the EPS for FY24E/25E by 3-5 epr cents as a result of a modest weakening in Q1FY24E. Rolling over to FY25E, we maintain ‘BUY’ with a TP of Rs 900 (formerly Rs 886),” it said.
Due to last year’s high base, Nuvama said that Prince Pipes recorded a 2% decrease in volume compared to an expected 3% increase. But even though PVC prices went down 33% year over year, a good mix of products kept Prince Pipes’ sales from going down more than 13%.
“While Q1FY24 volumes are likely to suffer as a result of global ERP rollout, volumes should remain healthy for FY24 given PVC price stability and rising affordability (due to lower PVC prices).” In addition, Prince Pipes is allocating Rs 150 million to build a 35,000 mt capacity in Bihar (East India), which is expected to be operational by Q4FY25. With this new capacity in the East, there is a good chance of growth after FY25. Also, demand from real estate, crops, and infrastructure should give the economy a boost,” the report said.
