19 Oct , 2021 By : Kanchan Joshi
Multibagger stock: Prince Pipes and Fittings shares are one of the multibagger stocks in 2021. The stock has delivered around 10 per cent return in last one month while in last 6 months, this stock has risen from around Rs495 to Rs748 per share levels, yielding around 50 per cent return to its shareholders. However, in year-to-date time, this stock has delivered around 145 per cent return after surging from near Rs305 to Rs748 apiece levels.
However, HDFC Securities see more gains in this multibagger stock. According to the fundamental research report by the brokerage, Prince Pipes and Fittings share price may go up to Rs885 per share levels in next two quarters, yielding around 20 per cent return to its shareholders.
Highlighting numbers in regard to earnings, HDFC Securities report says, "PPFL earnings grew at a CAGR 17 per cent over FY17-21. Going forward, we are positive on the future growth prospects and expect PPFL to be ahead of the category performance. In our view, PPFL’s revenue and PAT is likely to record a growth of 21 per cent and 16.7 per cent CAGR over FY21-23E. Along with this we expect the company to generate consistent FCF with consistent high ROEs."
The brokerage report went on to add, "Also market share of organized pipe players has improved from around 50 per cent in FY10 to around 67 per cent in FY21. We expect, PPFL to benefit from consolidation in the plastic piping industry on back of it’s a) robust balance sheet b) tighter working capital norms c) vast pan India distribution and manufacturing network and d) diversified product portfolio."
PPFL has strong Pan India presence with manufacturing facilities spread North (42 per cent of capacity); West (35 per cent of capacity) and South India (23 per cent of capacity). The company has strong positioning in the Northern and Western India though its brand “Prince" while in southern India it operates though brand “Trubore". In 2012, it had acquired premium brand Trubore brand from Chemplast Sanmaar.
PPFL is adding new products (DWC or Double wall corrugated pipes, storage tanks, valves, industrial pipes etc) to expand its product basket which will aid in driving premiumisation. The technical tie-up with Tooling Holland, the global leader in mould helps in manufacturing products of global standards.
On its suggestion to stock market investors in regard to this multibagger stock, HDFC Securities said, "We feel investors can buy the stock in the band of Rs740-750 and further add on dips at Rs663 for a base case fair value of Rs825 and bull case fair value of Rs885 for a time horizon of 2 quarters."