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We interacted with the management of Prince Pipes & Fittings Ltd to understand the on-going demand trends, update on recent launch of sanitaryware & faucets & impact of transition to global ERP system & following are the key highlights:

* Challenges in migrating to global ERP system impacted company’s operations for first half in Q1FY24.

* Management expects real estate demand will continue for next 3-4 years, that will drive growth for plumbing products.

* Management expects, Eastern part of India will continue to be a major growth driver for Indian Pipe Industry in coming years.

* West & North contribute ~60% Revenue while East & South contribute ~40% revenue for the company.

* PVC prices have corrected by Rs 6-8/Kg in Q1FY24.

* Channel inventory continues to remain at ~20-25 days.

* CPVC contributes ~20-25% of revenue & Fittings contribute ~30-35% of topline.

* Company got the possession of land in Bihar & will start construction in Q3FY23. This plant will cater to demand in East. Earlier, Haridwar plant and some outsourced capacities were catering to demand in East, now this new plant will reduce freight cost and improve efficiency for the company. Company will incur capex of ~Rs1.5Bn & same will be operational from Q4FY25.

* Overall capex for FY24 will be Rs750-800Mn for east plant & Rs800-850Mn for regular capex.

* On 22nd June, 2023, Company has launched its new collection of faucets and sanitaryware. Company is focusing on showcasing its unique European inspired bathware range and creating its market in North and Western India. Company will tap Eastern and Southern market over next 6-12 months.

* Company has recently appointed Mr. Harsh Kumar, to drive the Sanitaryware & Faucet segment. Mr. Harsh Kumar has an experience of over 22 years. He has spent a large part of his career, with over 15 years at Jaquar.

* Initially company plans to work on outsourced model for both sanitaryware and faucet. Later, company plans to establish a unit for manufacturing of faucet.

* Prince Pipes will leverage its existing distribution network to expand its bathware biz. Company surveyed its top 200 dealers, out of which 45-50% dealers already cater to bathware segment.

* Company has estimated to spend Rs80-100Mn on advertisement for bathware segment and Rs50-60Mn on manpower cost for FY24.

* Overall Advertisement spends for FY24 would be ~2% of revenue.

* Company will continue to launch innovative products that will find new applications and replace GI pipes. 

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