Prince Pipes and Fittings has surged 35.83 per cent over the past six months, and analysts at Motilal Oswal believe the rally has more steam left, projecting another 31 per cent upside in the stock.
The brokerage reiterated its 'Buy' rating on the PVC pipe maker, with a target price of ₹440, citing volume growth prospects, margin expansion, and capacity additions that strengthen the company's position in key markets.
Prince Pipes recently hosted an analyst meet on September 18, 2025, where management provided updates on industry dynamics, demand trends, and its strategic roadmap. While the near-term demand environment remains muted due to volatile PVC prices and weak trade sentiment, the company remains confident of delivering high single-digit volume growth in FY26.
"Given that Q2 is seasonally weak, we anticipate a healthy demand outlook in H2FY26, thereby maintaining our guidance for FY26," management told analysts.
Demand pressure lingers, ADD decision awaited
The domestic PVC pipes industry continues to be weighed down by pricing pressures. Reliance's base price for PVC resin stands at around ₹74.5 per kg, while open-market prices are lower as traders liquidate stock to free up working capital. Globally, China's PVC prices are subdued at $585-590 per MT.
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If anti-dumping duty (ADD) is implemented, the landed cost of imports would increase to about $760/MT, translating to ₹75-76 per kg in India. "This level is seen as sustainable by industry participants," analysts noted. Until then, uncertainty in the channel is dampening sentiment, with distributors adopting a cautious restocking approach.
Currently, channel inventory is at around 20 days, higher than the one-to-two weeks seen earlier. Management said Q2volumes would likely be 'marginally better year-on-year (Y-o-Y),' with a meaningful recovery expected in the second half. Distributors also echoed that demand usually softens in the monsoon quarter but rebounds strongly in Q3 and Q4, especially in northern and western markets.
Strategic expansion in CPVC and Bihar plant
A key highlight is the commissioning of the company's Begusarai plant in Bihar, which adds 45-50 ktpa capacity (including CPVC) by H1FY26. The facility is expected to run at 60-65 per cent utilisation by FY27, strengthening Prince Pipes' presence in eastern India, a region flagged as a high-growth market.
Management is also betting big on CPVC, which now contributes 22-25 per cent of overall volumes. The company has captured a 10-12 per cent share of the ₹5,000 crore CPVC industry, supported by its tie-up with Lubrizol for quality CPVC compounds. "Backed by our positioning in project sales, we are well-placed to drive CPVC penetration further, though retail remains price-sensitive," management said.
At present, blended realisations stand at ₹150-160 per kg, while CPVC resin is priced at ₹105-120 per kg. Agriculture pipes, which account for around 30 per cent of volumes, are also seeing strong traction due to affordability.
Bathware and diversification
Prince Pipes is diversifying into adjacencies with its bathware division, which is projected to break even at revenues of ₹80-100 crore by FY27. "The current trajectory gives us confidence of reaching break-even on schedule," management noted.
The company's sales mix remains retail-heavy, with 78-80 per cent volumes coming from the retail channel and 20-22 per cent from projects. Government contracts contribute just 5-7 per cent of sales, reducing reliance on state-led orders.
Margins, inventory, and capex
The company has already seen an improved margin profile this quarter. Management said at quarterly volumes of 50 ktpa, Ebitda margins of 11-12 per cent are achievable, with further upside as volumes cross 56-57 ktpa. Inventory days currently stand at around 110, with a target to reduce to 70-75 by year-end, which should improve working capital efficiency. Capex plans of ₹240 crore for FY26 remain unchanged, with allocations toward capacity expansion, bathware, and maintenance.
Prince Pipes: Outlook and valuation
Motilal Oswal projects a 12 per cent volume CAGR for Prince Pipes over FY25-28, aided by capacity expansion, product diversification, and operating leverage. Structural demand drivers such as government housing schemes, plumbing upgrades, and GST rationalisation are expected to provide tailwinds.
"Despite near-term uncertainties, the company's medium-term growth trajectory remains intact," Motilal Oswal said, maintaining a 'Buy' rating with a target price of ₹440, valuing the stock at 30x FY27E EPS.
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