Buy Prince Pipes and Fittings; target of Rs 723: ICICI Securities

ICICI Securities is bullish on Prince Pipes and Fittings recommended buy rating on the stock with a target price of Rs 723 in its research report dated March 22, 2024.

Broker Research

March 22, 2024 / 17:20 IST

Buy

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Todays L/H

ICICI Securities research report on Prince Pipes and Fittings

Prince Pipes (PRINCPIP) has announced an asset-based purchase of bathware brand Aquel (faucetware plant capacity of 0.1mn pieces p.a.) for a cash consideration of INR 550mn (funded via internal accruals). Aquel is a 25-year-old brand with presence in western, central and certain parts of southern India. Aquel’s current promoters have sold the business to PRINCPIP due to financial stress. We believe this acquisition was necessary for PRINCPIP to have a manufacturing base in faucets, which is a pre-requisite for growing the bathware segment. As per PRINCPIP management, it can capitalise Aquel’s dealer mindshare by regular servicing. This acquisition is likely to boost PRINCPIP’s plans of being a notable player in the bathware segment. However, revenue contribution from this segment may remain small (<5%) in the near term.

Outlook

For pipes segment, management has guided for flat YoY volume growth in Q4FY24 and expects industry leading volume growth from Q1FY25. We cut our EBIDTA estimates by ~2-4% over FY24-26E but upgrade the stock to BUY (from Add), led by stock price correction, with a revised Mar’25 TP of INR 723 (earlier INR 739).

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