29 May , 2021 By : Kanchan Joshi
Shares of Prince Pipes and Fittings Ltd have surged over 900% in the last one year amid continuous reporting of better than expected earnings.
The scrip has hit a record high of Rs794 on 24 May. The firm's IPO hit the bourses on 31 December 2019 and the issue price was at Rs178 a share. The stock touched a low of Rs75 in May 2020. Since then, it has climbed 946%.
Prince Pipes reported a revenue of Rs761 crore in the March quarter of FY21, up 77% from a year ago of Rs431 crore. Net profit advanced 246% to Rs97 crore.
Volume growth rose 26% year-on-year (y-o-y) in the fourth quarter, margin expanded 590 basis points y-o-y to 19.3% led by inventory gain, product mix and price leverage. The company also sought to redress corporate governance by reversing a related-party transaction ( Rs40 crore in FY21). Besides, Rs160 crore in debt reduction strengthened the balance sheet, yielding a notable improvement in returns.
Brokerage firm Edelweiss Research says that the eye-catching outperformance forced their hand to raise FY22E and FY23E EPS by 10?ch and the multiple to 29x.
Prince Pipes enjoys 8% and 5% market share in CPVC pipe and overall PVC pipe segment, respectively. It gained market share in the third quarter of FY21 led by a healthy performance across segments with market consolidation.
Its new plant in Telangana, which started operations with an initial capacity of 4,000 tonnes per annum (TPA), is expected to have a total installed capacity of 50,000 TPA, which will be ramped up in a phased manner over the next 2-3 years.
"Prince Pipes continued to deliver strong performance led by healthy growth in agri and plumbing segments, improved operating efficiency and cost optimization measures. It has made multiple strategies to embark on its journey to the next level and sustain the business in the long run with tie-ups with Lubrizol and Tooling Holland. We expect PRINCPIP to expand its leadership with manufacturing expertise, leverage distribution and competitive agility", said Reliance Securities in a note to investors.
The brokerage firm expects its revenue, Ebitda and profit after tax to clock 14%, 14% and 20% compound annual growth rate, respectively, over FY20-24E. Ebitda stands for earnings before interest, taxes, depreciation, and amortization.
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