Prince Pipes and Fittings Q4FY21 ConCall Summary

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Business Updates

  • Revenue at Rs 761 crore vs Rs 431 crore YoY
  • EBITDA at Rs 147 crore vs Rs 58 crore YoY
  • EBITAD margin at 19.4% vs 13.4% YoY
  • PAT at Rs 97 crore vs Rs 28 crore YoY
  • Higher volumes led to better cost absorption 
  • Inventory gain during the quarter was Rs 30-35 crore driven by higher PVC prices; company has decided to pass on the benefits to channel partners
  • Finance cost down 38% due to complete repayment of long-term debt
  • Gross Debt as on 31st March 2021 stood at Rs 85 crore vs 261 crore YoY
  • Cash in book at Rs 103 crore (excluding IPO proceeds)
  • Working Capital days has improved to 37 days
  • ROCE for FY21 at 27.1% vs 20.7% YoY
  • ROE for FY21 at 23.6% vs 18.2% YoY 
  • Prince Pipes and Fittings  Ltd (PPFL) has been able to engage with top quality distributors across the nation post Lubrizol tie-up
  • Focus is now on the secondary retail network. PPFL is the first in the industry to launch a loyalty program “Uddan” for retailers and plumbers
  • Company is ramping up investment in technology through management system to strengthen Uddan. This will help in increase the visibility and accuracy of plumbers level data
  • Company is evaluating newer application that will not only improve the range but will also be margin accretive at gross margin level
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Participants

  • ICICI Securities
  • Oman India Joint Investment Fund
  • Lucky Investment
  • ValueQuest
  • JM Financial
  • ALFAccurate Advisors
  • New Mark
  • Edelweiss
  • Asian Markey Securities
  • Girik Capital
  • Haitong Securities
  • Anand Rathi
  • InCred Capital 
  • Big Vision Investing
  • Systematix
  • SK Patel

QnA

  • Inventory gain for H2FY21 at Rs 50-60 crore
  • Revenue contribution from building materials (plumbing and SWR) has increased to 69% in FY21 from 66% in FY20
  • Agri as a segment may not be as value added but cannot be ignored due to volume 
  • PPFL was the first company to increase the CPVC  prices in March 
  • CPVC was 18-20% of top-line before Lubrizol tie-up
  • Company has commenced the first phase of injection moulding at Telangana plant and will ramp up the capacity in next two quarters. Capacity would be increased to 50,000 MT over the next two years 
  • Lubrizol in tie-up  with local company putting up huge plant for CPVC resin in India
  • EBITDA Margin would be in the range of 13-14% but there are enough levers for margin expansion
  • Industry has witnessed 15% volume decline in PVC; degrowth is higher in agri relative to building materials 
  • Gross margin has not improved in CPVC
  • Maintenance and debottlenecking capex per year around Rs 40-50 crore
  • PVC prices have started to come down in domestic market but global price remain firm. Price drop is not as sharp as rise
  • Company has added more than 50 distributors during the quarter
  • East is the fastest growing market for the industry
  • Sustainable working capital days would be around 40-50 days
  • Company has no plan to venture into any other industry in next two years
  • PPFL has spent Rs 94 crore for Telangana plant as of now and another Rs 90 crore to be spent over two to three quarters
  • Company to put up greenfield plant in central or eastern region
  • PPFL has built very strong professional team. Sales head from Jaquar; Branding head from Pidilite; COO from Hindustan Unilever and Deputy CFO from ACC 
  • PPFL buys FlowGuard compound from Lubrizol. Company has exclusive tie-up with Lubrizol for that
  • Installed capacity at 250,000 MT; FY21 sales volume 138,000 MT
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By Sanjoy Banerjee Email id: sanshares@gmail.com Twitter id: sanshares

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Karan Sharma

Karan Sharma

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