Multibagger stock: 239% return since listing! ICICI Securities bets on this smallcap stock for over 30% upside

Shares of Prince Pipes and Fittings made a tepid debut on Dalal Street in December 2019, listing at Rs 160 per share on BSE and NSE. However, the multibagger stock is now hovering around Rs 540 levels. It has delivered over 239 per cent return to its shareholders since listing. 

ICICI Securities believes that the stock still has an upside potential of over 30 per cent from Friday's closing price of Rs 541.95. It has maintained a 'Buy' rating on the stock with a target price of Rs 707. The small-cap stock is currently down over 26 per cent from its 52-week high of Rs 729, hit on April 11, 2022.

The brokerage firm continues to like the company for its long-term growth prospects led by its comprehensive product portfolio, focus on enhancing distribution reach and emphasis on branding.

ICICI Securities also interacted with the management of the company and it indicated that in the ongoing quarter, plumbing demand remained healthy but agri demand has started picking up from the end Mar’23 only, which will thus, result in a muted quarter on a year-on-year basis. It said that the demand for agri pipes has been delayed due to higher channel inventory build-up in Jan-Feb’23 and the management is hopeful of it reviving from Apr’23 and thus, resulting in higher growth in Q1FY24. 

The company's management believes pipe volumes can sustainably grow in double-digits in the medium term, driven by demand from housing, agri segments and increasing its distribution reach in markets such as South and East India where it has a comparatively lower presence. "Operating margins should normalise in Q4FY23 as PVC prices were stable after a turbulent 9MFY23. Management has guided for 12-15% operating margins to be sustainable in the pipe business over the long term," ICICI Securities said.

It highlighted that the company had announced its foray into the bath ware segment and the company plans to roll out products from this segment by mid-Q1FY24 using an outsourcing model in its stronghold markets of Northern and Western India. 

Prince Pipes and Fittings is one of the leading polymer pipes and fittings manufacturers in India in terms of stock-keeping units (SKUs) and the number of distributors.