PRINCEPIPE - Prince Pipes and Fittings Limited Share Price

In the Q1 FY '26 earnings call, management provided an outlook marked by cautious optimism despite macroeconomic challenges. They noted that while the overall demand environment remains fragile, they are beginning to see signs of recovery, particularly driven by anticipated government infrastructure spending. Management expressed confidence in achieving high single-digit to low double-digit volume growth for the fiscal year.

Key figures highlighted included:

• Volumes for Q1 at 43,735 metric tons, marking a 4% year-over-year increase.
• Revenue from operations at INR 580 crores, a decline of 4% year-over-year due to lower pricing.
• EBITDA reported at INR 40 crores, resulting in a margin of 7%.
• Profit after tax at INR 5 crores for the quarter.
• A targeted capex of approximately INR 160-170 crores for the full fiscal year, primarily focused on ongoing expansions.
• Revenue from the Bathware segment, Aquel, was INR 11 crores in Q1, with a target of INR 50-60 crores projected for the full year.

Management emphasized ongoing investments in brand visibility and capacity expansion, particularly with plans for the Phase 2 expansion of their Bihar facility, set for completion in Q2 FY '26 to enhance output.

On the profitability front, management acknowledged a temporary inventory loss in Q1 ranging from INR 15-20 crores but suggested that EBITDA margins would improve alongside volume and pricing stabilization throughout the year. They remain focused on operational resilience and innovation in their product offerings to maintain competitive advantage and stimulate growth, anticipating a gradual uptick in market conditions as the year progresses.

Question from Shravan Shah: "So first, on the volume growth, so 3.7% growth we have done in this quarter. So in the second quarter, how do you see the growth?"

Answer: "We are optimistic about the second quarter. July has started on a good note, and we anticipate achieving high single-digit to low double-digit growth throughout the remainder of the year, supported by demand recovery and upcoming market dynamics."

Question from Sneha Talreja: "Could you also quantify other reasons like what has been the loss from the Bathware segment?"

Answer: "The Bathware segment experienced a loss of approximately INR 5 crores, which translates to about 0.8% to 1% of our overall margin. We expect margins to improve going forward as we normalize from these losses in the coming quarters."

Question from Keshav Lahoti: "Now, how are the trends on the incentive side in the market? Has it changed?"

Answer: "Channel sentiment has improved compared to the previous quarter. While we've noticed some price reductions, they aren't as drastic as before. We are rationalizing incentives based on market dynamics, balancing the need for volume growth with the goal of improving margins."

Question from Pranav Mehta: "So I wanted to understand on two things. One is on the interest cost. So that has seen a sharp jump. So anything one-off there?"

Answer: "The increase in interest cost is due to capitalizing our Bihar project's term loan until we commenced production. Now operational, these finances constitute a regular expense, leading to the observed difference in our Q1 financials compared to the previous quarter."

Question from Meet Jain: "So basically, our demand will be more driven by higher launches of new residential projects across India and more CAPEX from private organizations, right, then more focus on government infra?"

Answer: "Yes, primarily, we expect growth driven by increases in residential projects, as recent government initiatives are expected to positively influence demand. However, agriculture remains a smaller segment, representing around 30% of our overall revenue."

Question from Utkarsh: "When will our Bihar plant reach breakeven?"

Answer: "The Bihar plant is projected to reach breakeven in approximately five years at around 70% capacity utilization. However, we anticipate a positive contribution to EBITDA starting from Q3 or Q4 of this year as we ramp up production."

Question from Tushar: "Sir, in terms of your split, like plumbing would be what percentage, and the infrastructure would be what percentage of your revenue?"

Answer: "Plumbing constitutes around 55% of our revenue, while infrastructure represents approximately 3% to 4%. Agriculture accounts for about 30% to 35%, followed by smaller contributions from water storage."

Question from Shravan Shah: "So how much cash capex did we do in Q1?"

Answer: "In Q1, our capital expenditure was around INR 75 crores. For the remaining part of the year, we estimate capex between INR 160 crores to INR 170 crores, which includes the ongoing expansion in Bihar."

Question from Arun: "You mentioned July was pretty good. Just to understand would it be high single-digit kind of growth in the first two months of this quarter?"

Answer: "While I cannot give precise numbers, we maintain our guidance of high single-digit to low double-digit growth for the year based on the positive trends observed in July and the growth momentum we anticipate going forward."