Prince Pipes And Fittings Limited
9,234words
143turns
12analyst exchanges
5executives
Management on call
Ashish Poddar
SYSTEMATIX INSTITUTIONAL EQUITIES
Parag Chheda
JOINT MANAGING DIRECTOR - PRINCE PIPES & FITTINGS LIMITED
Shyam Sharda
CHIEF FINANCIAL OFFICER - PRINCE PIPES AND FITTINGS LIMITED
Anand Gupta
DEPUTY CHIEF FINANCIAL
Nihar Chheda
VP STRATEGY- PRINCE PIPES AND FITTINGS LIMITED
Key numbers — 40 extracted
Rs.25 Crore
am happy to state that Prince Pipes has been able to raise commercial papers worth approximately Rs.25 Crores. Our commercial paper rating is A1 plus as per CRISIL. While we continue to remain long-term deb
9%
over the medium term. Despite the headwinds and despite a strong base we have been able to post a 9% volume growth in Q4. We have continued to gain market share even in such demand environment; ho
Rs.901 Crore
riends. I will be taking you through Q4 FY2022 financials now. For Q4 FY2022 revenue has grown to Rs.901 Crores compared with Rs.761 Crores in Q4 FY2021 indicating a growth of 18% on account of better product
Rs.761
Crore
through Q4 FY2022 financials now. For Q4 FY2022 revenue has grown to Rs.901 Crores compared with Rs.761 Crores in Q4 FY2021 indicating a growth of 18% on account of better product mix and impro
18%
evenue has grown to Rs.901 Crores compared with Rs.761 Crores in Q4 FY2021 indicating a growth of 18% on account of better product mix and improved realization. Sales volume has increas
Rs.45287
of better product mix and improved realization. Sales volume has increased by 9% at Rs.45287 metric tonne in Q4 FY2022 as compared to 41644 metric tonne in Q4 FY2021 indicating a better marke
15.6%
ic tonne in Q4 FY2021 indicating a better market share gain. EBITDA margin for Q4 FY2022 stood at 15.6% compared to 19.3% in Q4 FY2021 declined by 370-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores comp
19.3%
021 indicating a better market share gain. EBITDA margin for Q4 FY2022 stood at 15.6% compared to 19.3% in Q4 FY2021 declined by 370-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores compared to Rs.147 C
Rs.140 Crore
022 stood at 15.6% compared to 19.3% in Q4 FY2021 declined by 370-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores compared to Rs.147 Crores in Q4 FY2021 declined by 4%, PAT stood at Rs.88 Crores compared to Rs.
Rs.147
Crore
d to 19.3% in Q4 FY2021 declined by 370-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores compared to Rs.147 Crores in Q4 FY2021 declined by 4%, PAT stood at Rs.88 Crores compared to Rs.97 Crores in Q4 FY2021.
4%
-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores compared to Rs.147 Crores in Q4 FY2021 declined by 4%, PAT stood at Rs.88 Crores compared to Rs.97 Crores in Q4 FY2021. For the full year FY2022 reve
Rs.88 Crore
22 EBITDA is at Rs.140 Crores compared to Rs.147 Crores in Q4 FY2021 declined by 4%, PAT stood at Rs.88 Crores compared to Rs.97 Crores in Q4 FY2021. For the full year FY2022 revenue is at Rs.2657 Crores c
Guidance — 20 items
“Let me start with a macro view at the industry level before giving a perspective into our company level performance and our strategy going forward.”
“These efforts have started showing results but the true dividends will be obtained over the medium term.”
“What will be the enablers for Prince to continue to gain market share going forward.”
“Our SFA which is the Sales Force Automation should be live by the end of Q1 while our DMS which is the Distributor Management Systems will be made live in a phase-wise manner over the next two quarters.”
“We will be cross selling chambers to the end users who are using our Corfit DWC pipes.”
“We continue to remain extremely optimistic on demand going forward due to significant demand traction in the real estate sector.”
“I will be taking you through Q4 FY2022 financials now.”
“For your guidance for FY2023 in terms of margins would be what?”
“I think we continue our guidance that has always given for the past many quarters of operating margin in the range of 13% to 15%.”
“If you could give some idea as to what is the breakup in terms of raw material and finished goods and number two I think Shyam did to mention in the opening remarks that this inventory will be absorbed in the first quarter did I hear it right?”
Risks & concerns — 5 flagged
In conclusion I would like to state that volatility and uncertain environment is short term in nature.
— Parag Chheda
Despite a large base and despite the uncertain market conditions we have been able to consistently outpace the industry growth and gain market share, so the reason behind this higher inventory days has been it is not something which has happened by accident it was a strategic decision to ensure that we never have any shortages and are constantly able to keep up with the demands of the market.
— Management
Just one last question from my side if you look at the overall demand if you look at individual segments of your demand drivers one is housing, which has been strong and which the outlook is also strong, agri has been because of a weak base and last two seasons have not been great and then you have Nal-se-Jal and infrastructure projects so housing and infrastructure projects you have been consistent in saying the demand has been good.
— Abhishek Ghosh
Now my first question is on the volume growth basically what is the sustainable volume growth that we can see for the next two to three years and my second question is basically on the gross margin so is the product mix only the reason for the gross margin decline or is there in some component of inventory losses as well?
— Shrenik Bachhawat
So in that case could you help me with the industry growth or decline in FY2022?
— Shrenik Bachhawat
Q&A — 12 exchanges
Q
Congratulations on a decent set of numbers. When one looks at the PVC price now that it has fallen to about Rs.125 do you see a prospect of inventory losses during the current year FY2023?
Management
Thank you Sujit. Yes, there has been a significant correction in the past month in PVC prices and as you are aware the PVC raw material has been extremely volatile like any other commodity in the past few quarters and there will be certain quarters of inventory loss, certain quarters of inventory gain, so right now it does look like there could be some inventory loss in the first quarter, but if I look at the March quarter the kind of correction that we saw in the PVC prices in January and February we were certain of some inventory losses but then the price increases in the March month sort of
Q
Thank you for the opportunity. First of all a good performance in a challenging environment. My first question is if we look at the balance sheet we see that the inventory days have gone up meaningfully. If you could give some idea as to what is the breakup in terms of raw material and finished goods and number two I think Shyam did to mention in the opening remarks that this inventory will be absorbed in the first quarter did I hear it right?
Management
I think that is an important question and let me clarify that for the entire audience. So firstly if we look at the inventory in days it is around 85 days whereas normal inventory that Prince has always carried is around in the range of 60 to 70 days so which means that the gap is around 15 to 20 days of higher inventory. Now the reason behind this higher inventory is that we have witnessed a major global supply chain crisis in the past year and since the past few quarters we have consistently maintained that this is a strategic decision by the management to keep higher inventory levels than n
Q
This question is from my end in the start of the quarter or maybe even in middle of the quarter we were actually looking at a flattish kind of a growth, just want to understand the reason that led to upbeat growth, what was it related to was it agri demand, was it plumbing demand and more importantly how is the inventory now at distributors end, have we seen some amount of stocking up in the month of March and now it is getting normalized some flavor there?
Management
Thank you Sneha. We were definitely looking at a flattish sort of a quarter towards the first half of the quarter but March month did see a revival in terms of demand, in terms of sentiment across the channel. This has largely been driven by plumbing and SWR, agri did improve in March compared to February, but not to the extent that it usually delivers for us in the January to June period so this demand has been still driven by plumbing and SWR products and the second half of the quarter has been much better than the first half of the quarter. Also if I have to give you a more long-term view o
Q
Good morning team and congratulations on a decent set of numbers. Sir I wanted to understand on the current availability of the CPVC resin because we had also heard that availability of CPVC resin is also tight in the global markets, the plants which were expected to get commissioned in India, have they started supplying some of the CPVC resin which might reduce the imports for the players that was my first question and Sir the second question is related to how are you adding your channel particularly in the tier-1 and II markets and tier-2 below market so how that thing is panning out if you
Management
Thank you. If I remember correctly the first question was to do with CPVC, so the local capacity of Pranav have not really kicked in for the CPVC raw material manufacturers, so India as a industry we continue to be import dependent for the CPVC raw material. The availability is still not easing in the way the PVC raw material availability is easy and this will continue for the next one year minimum and we are in a good position and have strong supply security in CPVC as well and like I mentioned in the previous answer as well that we have been able to post double digit growth in CPVC as well d
Q
Thanks for the opportunity. Just couple of things in terms of the capacity you broadly at about 283000 tonnes so what is the capacity addition going forward, how should one look at it in broad capex plans?
Management
Thank you for your question. Most of the capacities that had to be put in Jaipur and Telangana are on stream, so there will not be any major new capacity coming in. The focus at least for the next if I have to talk four quarters has to be on sweating out the effects at Jaipur and Telangana ramping up capacity utilization by ramping up the market share, the market penetration and these newer geographies that we put up plants in, so for the next four quarters we just need to keep our focus on sweating out these assets and improving the utilization before putting up any major capacities going for
Q
Thanks for the opportunity and congratulations on a good set of numbers. Now my first question is on the volume growth basically what is the sustainable volume growth that we can see for the next two to three years and my second question is basically on the gross margin so is the product mix only the reason for the gross margin decline or is there in some component of inventory losses as well?
Management
In terms of volume growth it is hard to give any guidances in such sort of a volatile market, but we have outpaced industry growth consistently and we continue to do that and in terms of a guidance it is very hard to sort of estimate where industry growth will be but I do believe that we will continue to outpace industry growth by 2% to 3% in a base case so we continue to remain bullish in terms of our ability to gain market share and overall the revival and real estate that we are seeing makes that will have a significant demand traction certain industry level as well over the medium to long
Q
Thank you for the opportunity. Can you just help us with the revenue and volume growth numbers for polymerizing end user industry wise for the full year?
Management
Like you are aware the volume growth for us has been 1% over the past financial year, so this is very heartening to see that in this kind of a business environment. We have been able to keep our volumes intact in the face of a challenging business environment and on a large base as well and for the quarter, our volume growth has been 9% and this has largely been driven by the CPVC and PVC plumbing products as well as the SWR products. Okay and can you just split it in irrigation or plumbing and SWR? Like I said the growth has been driven by the plumbing and SWR as a company policy and as an in
Q
Just from the new product launches, the HDPE pipe and the manhole chambers, how big is this market and what is the landscape like and if you take a three, five year view how big could be due for business in terms of revenues?
Management
Sorry, Vivek, I was not able to hear your question. I was asking about the new products that we are launching the HDPE pipe and the manhole chambers how big is this overall industry and what is the overall landscape like and what revenues Prince would see from these products in a three, five year scenario? Manual chambers and inspection chambers are mainly going to be cross sold with the DWC pipes in which we are seeing a good traction and a good growth especially in the past one year, so these manual chambers and inspection chambers are for the underground drainage sort of infrastructure, ver
Q
Good morning everyone. I have few questions. First on the capex part, if we see over the last two years we have spent roughly around Rs.290 Crores to Rs.300 Crores odd on the capex whereas our pipe capacity has just grown by around 26000 to 26500 tonnes, can you please help me out why the pipe capacity addition is so small compared to our a large capex?
Management
That is a good question Utkarsh. This number of around Rs.250 Crores to Rs.300 Crores includes two greenfield projects in Jaipur and Telangana so significant chunk of this has gone into infrastructure, civil and utilities at both the plants and the land bank as well which is why the capex number is higher and like I said in the next one to two years, the focus will now be on these capacities how we sweat out these effects and drive the market share on the front end which will help us improve the capacity utilization on the back end and the good part is now we have the land bank we have the inf
Q
This is Rajesh Kothari here. A great set of number in otherwise challenging environment. I have just one question. If I look at the overall industry growth and of course brings it out perform industry but let us take Prince numbers for a moment that in the last three years FY2020, FY2021 and FY2022 volume growth of 3%, 4% and 1% and this is of course better than industry because it means industry has been either zero or it would have been a degrowth, so if I compare this with FY2019 of course FY2019 the volume growth of industry was also high and Prince was also at around 18% so my question is
Management
The flattish growth of degrowth at an industry level has majorly been on account of COVID and other challenges which have not only been I think in the industry but for the economy and the global economy at large. Going forward like we said earlier in the call that the industry is poised for growth I would say high single digit growth at an industry level is very, very attainable to answer your question and that is on the back of strong demand traction from the real estate sector. I do believe will help this industry grow at the pace that it should be growing. Why you are saying that it is goin
Q
I have a few questions. First coming up on the capacities during FY2022 can you share the split of capex cross plans, where are they spend these capex amount?
Management
We will get back to you on the plant wise capex. I just wanting to because this Telangana plant broadly what would be the split of capex and is there anything pending on the Telangana plant and even on the Jaipur plant? No, the majority capex has been concluded. Okay, why I am asking this because the PBT continues to say that phase wise capacity expansion over next to two to three years? Yes maybe that would be an error but there will be incremental capacity as the demand improves there is we have set up the infrastructure and the civil and the utilities in such a way that we have an ability t
Q
Thank you to all the participants for joining the call today. Thank you.
Opening remarks
Ashish Poddar
Good morning everyone. I am Ashish Poddar from Systematix Group. I welcome you all for joining today. It is our pleasure to host the senior management of Prince Pipes and Fittings Limited led by Mr. Parag Chheda, the Joint Managing Director of the Company. I request Mr. Parag to give an opening remark post which we shall open the floor for question and answer question. Over to you Sir!
Parag Chheda
Thank you, Ashish. A very good morning everyone and thank you for joining us for the Q4 FY2022 earnings call. The presentation in the press release have been issued to the exchanges and uploaded on the company's website. I hope everyone had an opportunity to go through the same. I am happy to state that Prince Pipes has been able to raise commercial papers worth approximately Rs.25 Crores. Our commercial paper rating is A1 plus as per CRISIL. While we continue to remain long-term debt-free the raising of commercial paper highlights the quality of our balance sheet and the faith of investors in our business model and long-term prospects. Let me start with a macro view at the industry level before giving a perspective into our company level performance and our strategy going forward. The volatility in the raw material prices continued throughout the March quarter. While PVC prices softened in January and February upward hikes also took place in the month of March. This led to a uncertain
Shyam Sharda
Thanks. Parag Bhai and good morning friends. I will be taking you through Q4 FY2022 financials now. For Q4 FY2022 revenue has grown to Rs.901 Crores compared with Rs.761 Crores in Q4 FY2021 indicating a growth of 18% on account of better product mix and improved realization. Sales volume has increased by 9% at Rs.45287 metric tonne in Q4 FY2022 as compared to 41644 metric tonne in Q4 FY2021 indicating a better market share gain. EBITDA margin for Q4 FY2022 stood at 15.6% compared to 19.3% in Q4 FY2021 declined by 370-bps. For Q4 FY2022 EBITDA is at Rs.140 Crores compared to Rs.147 Crores in Q4 FY2021 declined by 4%, PAT stood at Rs.88 Crores compared to Rs.97 Crores in Q4 FY2021. For the full year FY2022 revenue is at Rs.2657 Crores compared to Rs.2072 Crores in FY2021 a growth by around 28% on improved realization. Sales volume has increased to 13934 metric tonne in FY2022 as compared to 1380289 metric tonne in FY2021 indicating a marginal increase of 1%. Profit after tax has improved