After rallying 425 per cent in the last three financial years, brokerage Nuvama sees more upside in the company which is well placed in domestic markets. This is Hindware Home Innovation. Over the years, the company has diversified from sanitaryware manufacturing to faucets to consumer appliances in 2015 and to plastic pipes and fittings in 2018. Shares of the company jumped to Rs 354.35 on March 31, 2023 from Rs 67.50 in March 2020.
Nuvama on April 3 initiated the coverage on the stock with a ‘Buy’ rating and fixed a target price of Rs 546, reflecting an upside of xx per cent from the current market price of 348.25.
“Given its strong positioning in bathware, increasing presence in pipes and fittings and consumer appliances coupled with a comprehensive product portfolio, strong brand recall and a wide and expanding distribution reach, we are optimistic about its medium to long term growth prospects,” Nuvama said in a report.
Latest shareholding data showed that well-known equity investors also held over a 1 per cent stake in the company as of December 31, 2022. Ace investor Sunil Singhania-owned Abakkus Growth Fund 1 and Abakkus Growth Fund 2 together held a 4.88 per cent stake in the company. Other equity investors including Ashish Kacholia, Mukul Mahavir Agrawal and Porinju Veliyath’s Equity Intelligence India had 1.33 per cent, 1.38 per cent and 1.05 per cent stake in the company as of December 31 last year. Shareholding data for the March quarter is yet to be announced.
For the nine months ended December 31, 2022, the company posted 30.93 per cent year-on-year growth in consolidated net sales at Rs 2,105.42 crore. On the other hand, net profit declined 79 per cent YoY to Rs 34.81 crore during the same period. For the year ended March 2022, Hindware Home Innovation posted a profit of Rs 201.68 crore on consolidated net sales of Rs 2293.63 crore. The company reported a profit of Rs 54.70 crore in FY19 on net sales of Rs 1670.88 crore.
Nuvama also expects EBITDA margin of Hindware Home Innovation to expand 391 basis points over FY22-25, led by benefits of scale across segments, integration of manufacturing units within building products, operational efficiencies, easing commodity pressure and benefit of scale. It also believes that absolute EBITDA to expand at a 36 per cent CAGR over FY22-25, driven by strong revenue growth and margin improvement. It also expects the company to clock around 18 per cent sales CAGR over FY22-25.
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