Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Prince Pipes And Fittings Ltd (BOM:542907, Financial) reported a 4% year-over-year volume expansion, with a quarterly volume sale of 43,301 metric tons.
- The company is optimistic about achieving an 8-10% volume growth for FY25, driven by a strong focus on recovering sales volume.
- Prince Pipes And Fittings Ltd has been certified as a Great Place to Work, highlighting its positive work culture and high employee satisfaction.
- The company has expanded its branding efforts, increasing visibility in strategic locations such as metro trains and buses in Ahmedabad and Gandhinagar.
- The launch of the company's first Aquil by Prince retail showrooms in Haryana and New Delhi marks a significant expansion in their retail presence.
Negative Points
- The quarter witnessed a 16% fall in PVC prices, leading to severe destocking by channel partners, which adversely impacted volume and profitability.
- Revenues for Q2 FY25 stood at 622 crores, down from 656 crores in Q2 FY24, indicating a challenging operating environment.
- EBITDA for the quarter was 46 crores, significantly lower than the 71 crores reported in Q2 FY24.
- Inventory days increased to 88 days compared to 62 days in March 2024, reflecting a buildup due to lower-than-expected volume growth.
- The company had to offer special trade incentives to maintain volume growth amidst weak demand sentiment, impacting profitability.
Q & A Highlights
Q: How will the new plant in the East affect the company's volume trajectory?
A: The East is a fast-growing market due to its late urbanization cycle. We are among the top two players there. The new facility in Bihar will strengthen our supply chain and reduce freight costs, helping us penetrate the market more efficiently. By Q4 FY25, we aim to have a capacity of over 50,000 tons, which will support our volume growth aspirations. - Mr. Parag J. Chheda, Joint Managing Director
Q: What is the outlook for volume growth in the second half of the year?
A: We expect an 8 to 10% volume growth for the full financial year. The destocking seen in Q2 due to falling PVC prices is expected to normalize, and we are optimistic about demand due to a strong real estate cycle and affordable polymer prices. - Mr. Parag J. Chheda, Joint Managing Director
Q: How has the competitive landscape affected pricing and margins?
A: The industry remains fairly organized, with top players gaining market share. While there was aggressive pricing from one competitor, we responded with trade incentives to maintain volume growth without engaging in predatory pricing. Our focus remains on profitable growth. - Mr. Parag J. Chheda, Joint Managing Director
Q: What are the expectations for margins in the second half and beyond?
A: Margins are influenced by pricing power, product mix, and operating leverage. With improving PVC prices and strong demand, we expect to achieve 12-13% EBITDA margins, similar to historical levels. - Mr. Parag J. Chheda, Joint Managing Director
Q: Can you provide details on the CapEx plans for FY25?
A: Total CapEx for FY25 is projected to be in the range of 330 to 350 crores, including 170 crores for the Bihar facility, 30-35 crores for de-bottlenecking, and 80-90 crores for maintenance. Additionally, 43 crores are allocated for the second phase of the Aqui acquisition. - Mr. Anand Gupta, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
