Axis Securities has initiated coverage on the company with a buy recommendation and a target price of Rs 400 per share, an upside of 18 per cent from the current market price
Highlighting that Prince Pipes & Fittings is well-positioned to enhance its product mix, Axis Securities has stated that the company’s revenue is expected to record a compounded annual growth rate (CAGR) of 15 per cent from fiscal year 2025 (FY25) to FY28E, reaching Rs 3,830 crore by FY28E.
Axis Securities has initiated coverage on the company with a buy recommendation and a target price of Rs 400 per share, which implies an upside of 18 per cent from the current market price (CMP). The report noted that the company is well-positioned in high-growth regions such as the north and west, with an increasing focus on project-driven business, which contributes 20 to 25 per cent of revenues.
The company’s growth will be supported by favourable polymer price trends and a surge in real estate activity, driving volume growth and margin expansion. The report added that the company is leveraging its cross-selling abilities and distribution network to expand into the water tanks market. The total addressable market (Tam) for this market is around Rs 8,000 crore.
Revenue Growth
FY24 and FY25 witnessed revenue de-growth, primarily due to a sharp decline in raw material prices, while volume growth in FY25 remained minimal. However, the shift in focus toward volume growth as a driver of value growth is expected to support steady sales momentum. Volumes grew at an 8 per cent CAGR from FY22 to FY25.
The report added that improved confidence across inventory channels, coupled with demand revival in real estate and agriculture, is expected to strengthen market share. The company, which had earlier seen de-growth in Southern markets, is also planning to enhance its positioning in the region.
The company reported earnings before interest, tax, depreciation and amortisation (Ebitda) margins of 6 per cent in FY25, down from 12 per cent in the previous year. This was primarily due to high PVC price volatility and resultant inventory losses. Looking ahead, the focus on volume growth, along with VAP from the bathware segment, is expected to drive margin improvement. The company’s FOR (freight on road) model is likely to keep freight costs below industry levels while supporting supply chain efficiency, the report mentioned.
EBITDA is projected to grow at a 35 per cent CAGR from FY25 to FY28E on a low base. Axis Securities noted that the company’s pan-India manufacturing presence, wide stock-keeping unit (SKU) range, and product mix are expected to support sustainable Ebitda margins of around 11 per cent.
