Outperforming Q4; Growth momentum to sustain
About the stock: Prince Pipes and Fittings Ltd. (PPFL) is one of the largest domestic manufacturers of PVC pipes with a market share of ~5%.
• It has 9 manufacturing units, with a combined capacity of ~4.35 LTPA, across India.
• It has a strong network of over 1500+ distributors. Q4FY26 performance: Prince Pipes and Fittings reported strong Q4FY26 performance with highest ever quarterly sales volume of 62,167 MT (up 23% YoY/ 46% QoQ). Revenue increased 18% YoY to ₹ 850 crore, while EBITDA surged 100% YoY to ₹ 110 crore. EBITDA margin expanded sharply to 13% (up by 527bps YoY) driven by high gross margins of 29% (up by 380bps YoY) and improved operational efficiency. PAT rose 132% YoY to ₹ 56 crore with margins of 6.6% (up by 324 bps YoY). For FY26, volumes increased 8% YoY to 1,91,238 MT, while revenue grew marginally to ₹ 2,598 crore. EBITDA increased 43% YoY to ₹ 232 crore, with EBITDA margin improving to 9% (up by 250bps YoY). Adj. PAT (adjusted for exceptional item of ₹ 2 crore) rose 74% YoY to ₹ 75 crore. The Board also recommended a final dividend of ₹ 1/share for FY26.
Investment Rationale
• Eyeing volume growth of 12-15% YoY for FY27: The company is targeting volume growth of 12-15% YoY for FY27 (8% YoY in FY26) as it expects benefits sustaining from increasing retail contribution (currently at 30%), channel partner additions (thousands of dealers added over trailing few quarters), industry consolidation (addition of dealers from unorganised players and peers too) and rising value-added product share (target 27- 28% in FY28). It retained its EBITDA margin guidance of 11-12% for FY27 which would be aided by 1) pricing mix 2) product mix 3) de-centralising benefits from Bihar plant and 4) product innovation. On working capital front, it is in the range of 65-75 days with respect to inventory while targets 10 days reduction in debtor days (50 days in FY26) by FY27 end.
• Capex guidance of ₹ 200-210 crore for FY27: The company would continue to focus on increasing capacity utilisations at Telangana (underutilised) & Bihar (60% reached during Q4FY26) plants. It would be incurring capex of ~₹ 200-210 crore in FY27 towards building state of the art warehouses to increase its inventory storage capacity, de- bottlenecking of specific products at few plants and second tranche of investment for Aquel brand (~₹ 40-45 crore done in April 2026). On bathware, it retained its breakeven target by Q3FY27 on achieving ₹ 20- 25 crore quarterly revenue run-rate.
Rating and Target Price
• We estimate its revenues/EBITDA/PAT to grow at a CAGR of ~13%/31%/56% over FY26-FY28E. We retain BUY with an unchanged Target Price of ₹ 370/- i.e. 23x P/E on FY28E.
