Prince Pipes & Fittings Ltd

Q1 FY25 Concall Summary
Business Updates

• Marketing initiatives are being enhanced aggressively through clear visibility at strategic locations especially at travel locations ensuring visibility at locations of higher footfalls

Participants

Dolat Capital

HDFC Securities

BOB Capital

Axis Capital

Nuvama

PL Capital

Kotak

DAM Capital

QnA

• The growth has been across agriculture, plumbing and infrastructure and it is across the board
• On a long term basis EBITDA margins should range between 12-13% and that is a sustainable level
• The margins in Q1 are lower than the long term range primarily due to higher growth in agri space where margins are lower and also higher A&P spends which is a conscious effort from the management side
• Capacity addition will be an ongoing process as the long term outlook on the sector is positive and with CPVC becoming affordable and local production of CPVC increasing the market size of this product shall increase disproportionately
• The aspirations on volume growth are much higher than what is being delivered currently and thus capacities are being added and from a margin point of view some quarters get affected negatively due to being heavier on the agriculture side and also higher marketing costs being incurred currently
• Since the capacity addition is immediate and sales realisations take some time to reach optimum utilization the asset turn ratios will look lower currently
• The inventory will always range between 60-70 days and the top priority remains to keep good supply and thus management will not shy away from storing higher inventory
• On PVC anti dumping tough to speculate whether anti dumping will come and current PVC prices are lower for most PVC manufacturers who are struggling at current prices
• There was no inventory gains/losses during the current quarter
• Over the next couple of quarters the footprints in South and East India will be expanded on the bath ware side
• The outlook for growth over the next 2-3 years looks very good and on EBITDA margin side it should range between 12-14% with better control on receivables
• From a consumption point of view in terms of PVC India is one of the key market that is doing well and hence all PVC supplies of the world are being directed in India
• The company has seven manufacturing units with the eight one coming up in Bihar which will start in January and add 45000 tons of production capacity
• The overall industry is growing and there is no need to do predatory pricing and selling by undercutting others
• Inventory losses and gains are part of this industry and thus margins should always be analysed ex of inventory adjustements