Yes Securities bets on this multibagger stock for over 50% upside; here's why

Shares of plastic pipes manufacturers, Prince Pipes and Fittings (PP&F) have delivered a multibagger return to its shareholders in the last 12 months. In the past one year, the share price of PP&F jumped from Rs 294.75 to Rs 701 mark ---- logging around 138 per cent return in this period.
 
With a market capitalisation of Rs 7,700 crore, the shares stand higher than 200 day moving averages but lower than 5 day, 20 day, 50 day and 100 day moving averages.
 
Brokerage house Yes Securities noted that the plastic pipe industry is largely driven by irrigation (50 per cent demand) followed by plumbing and water supply systems (35 per cent demand). It expects PP&F to report Revenue/EBITDA/PAT growth of 12/8/11 per cent over FY21‐FY24E.
 
It has maintained a 'Buy' rating on the stock with a target price of Rs 1,091 per share and also picked it as one of its top stock picks for 2022.
 
On the back of the Government's initiatives like Jal Jeevan Mission which is likely to witness a sharp increase in budgetary spending, higher spending for urban development, Swachh Bharat Mission (capital outlay of 1.2 Lakh crore over 2021‐2026) coupled with higher agri spending should enable the plastic pipe industry to grow by 13 per cent over FY20‐FY24E, it added.
 
Yes Securities in its report said that PP&F has built their product portfolio towards margin lucrative products. With their tie‐up with Lubrizol (world’s largest CPVC compound manufacturer), company is well poised to increase its CPVC revenue in the coming years.
 
Owing to which the company is likely to report 15/15.5 per cent EBITDA margins in FY23E/FY24E respectively. Also, PP&F has strengthened its balance sheet by reducing total debt from Rs 275 crore in FY16 to Rs 80 crore in FY21, it noted.
 
"As of date, the company is long term debt-free, and we believe total debt to further reduce to Rs 35 crore in FY24E. Therefore, NetDebt/Equity is also expected to improve from ‐0.1x in FY21 to ‐0.3x in FY24E. With no major capex in coming years, we reckon PP&F to generate healthy free cash flow to the firm (FCFF) of Rs 380 crore in FY24E," the brokerage house stated in its report.
 
The plastic pipe manufacturer reported a standalone profit of Rs 76 crore for the quarter ended September 2021 as against a net profit of Rs 46.5 crore in the year-ago quarter. The company's net revenue rose 66 per cent to Rs 761 crore during the quarter.
 
Prince Pipes and Fittings Ltd (PPFL) is one of the leading polymer pipes and fittings manufacturers in India in terms of stock-keeping units (SKUs) and the number of distributors.