Buy Prince Pipes and Fittings; target of Rs 716: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Prince Pipes and Fittings has recommended buy rating on the stock with a target price of Rs 716 in its research report dated May 26, 2023.

Broker Research

May 29, 2023 / 15:04 IST

Buy

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Prince Pipes and Fittings

We revise our FY24/FY25 earnings estimate by 6.4%/11% to factor in a) healthy vol. growth guidance of ~12-15% given strong traction in real estate, infra and agri., b) stabilization in RM prices, which will normalize EBITDA margin (mgnt. conservatively expects EBITDA margin will be 13-15%), and c) reduction in working capital & healthy cash flow. Prince Pipes and Fittings (PRINCPIP) reported better than expected profitability, mainly with rebounding EBITDA margin to normalized levels (+19%) on account of stable input prices and focus on improving product mix. EBITDA/kg improved to Rs 33.5/kg and even after excluding inventory gain, EBITDA/kg was Rs ~29/kg; much higher than pre-COVID level. We believe PRINCPIP's performance should further improve led by 1) focus on increasing capacity utilization, 2) premiumisation and 3) better FCF generation. However, Q1FY23 will be soft given its transition towards a global ERP system.

Outlook

We estimate FY23-25E Sales/EBITDA/PAT CAGR of 12.4%/41.0%/60.1% with volume CAGR of 12.2% and EBITDA margin of 14.5% in FY25E. We revise our TP to Rs716 (Rs693 earlier), based on 25x FY25E EPS which is discount of 10% to its historical average PE. Maintain ‘BUY’.

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