Prince Pipes hits the highest level since listing; stock zooms 242% in 4 months
Shares of Prince Pipes and Fittings were at Rs 260 — their highest level since listing — up 8 per cent on the BSE in the intra-day trade on Friday. In the past four months, the stock of the plastic products maker has zoomed 242 per cent from a level of Rs 75.90, as compared to a 20 per cent rise in the S&P BSE Sensex.
Prince Pipes and Fittings had made a tepid debut at the bourses on December 30, 2019. The stock got listed at Rs 160, an 11 per cent discount to its issue price of Rs 178.
For April-June 2020 quarter (Q1FY21), the company reported 40 per cent year on year (YoY) decline in EBITDA (earnings before interest, taxes, depreciation, and amortization) at Rs 32 crore. Margin, meanwhile, contracted by 335 basis points to 10.6 per cent from 13.95 per cent in the previous year quarter.
According to the management, May’20 saw healthy traction and recovered more than 80 per cent of sales from the previous year sales, largely driven by agri-segment which was classified as essential goods. Despite the headwinds of the pandemic, June’20 saw a full recovery over the previous year as the company saw an encouraging growth over June’19. June’20 saw recovery not just in Agri segment but also in plumbing and SWR segments, it said.
Prince Pipes and Fittings is India’s largest PVC pipes manufacturer and one of the fastest-growing companies in the industry. The company is engaged in the manufacturing of polymer piping solutions in four types of polymers – CPVC, UPVC, HDPE, PPR. In June 2020, the Company through a pilot launch introduced a new water tank segment-STOREFIT in Gujarat to be later launched in other markets across India.
In the past one month, the stock has soared 50 per cent after the company announced the launch of Prince FlowGuard Plus in association with Lubrizol, inventors and largest manufacturers of CPVC compounds worldwide, headquartered in the United States.
Sectorally, the Indian plastic pipes and fittings industry growth outlook remains strong driven by the Government focus on expanding areas under irrigation and increasing urban infrastructure spending which determines the demand for Water Supply and Sanitation (WSS) and affordable housing projects in urban, semi-urban and rural areas.
Various schemes and initiatives like Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Smart City projects, Housing for All by 2022 etc. will provide stronger impetus to industry growth. This, analysts say, will be further aided by the growing penetration of branded plumbing pipes in the affordable housing project segment and need-based replacement potential of plumbing pipes.
“It will have twin benefits as capacity additions coincide with market consolidation. Such market consolidation is due to the imposition of high anti-dumping duty on imported CPVC resin from China/Korea, the weak balance sheet of few companies having significant regional presence and some fringe national players,” Prince Pipes and Fittings said in its 2019-20 annual report.
At 10:29 am, the stock was trading 5 per cent higher at Rs 251 on the BSE, as against 1 per cent rise in the S&P BSE Sensex. A combined 910,000 equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report