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Lower costs drive operational beat

Prince Pipes and Fittings’ (Prince Pipes) 2QFY26 revenue declined ~4% YoY/ grew 2% QoQ to INR 5.9bn; ~4-6% below our and consensus estimates. However, EBITDA rose 21% YoY/ 39% QoQ to INR 551mn supported by lower than estimated cost. Consequently, blended EBITDA/kg improved 22% YoY/ 35% QoQ to ~INR 14/kg. Adjusted PAT remained broadly flat YoY but surged ~3x QoQ to INR 146mn (JMFe: INR 84mn). Pipes and fittings volumes fell ~1% YoY and ~2% QoQ to 43kt in 2Q. The management guided for high single-digit volume growth in FY26 (vs. earlier high single- to low double-digit) and expects margins to normalise to double digits from 4QFY26 onwards. Factoring in the 2Q performance, continued near-term demand weakness, and delayed recovery in the bathware segment; we cut our FY26E EPS estimates by ~20% and FY27E–28E by ~9–13%. We maintain our ADD rating with a revised target price of INR 350/share, based on 27x Dec’27E P/E post quarterly roll-forward.

* Result summary: Prince Pipes’ pipes & fittings volume declined ~1% YoY and ~2% QoQ to 43kt in 2Q, while blended realisation declined ~4% YoY/ increased 5% QoQ to ~INR 136/kg. Revenue declined ~4% YoY/ grew 2% QoQ to INR 5.9bn. EBITDA rose 21% YoY/ 39% QoQ to INR 551mn owing to lower than estimated cost, while EBITDA margin expanded 192bps YoY/ 245bps QoQ to 9.3%. Blended EBITDA/kg increased 22% YoY/ 35% QoQ to ~INR 14/kg. Adj. PAT broadly remained flat YoY/ rose ~3x QoQ to INR 146mn. In 1HFY26, company has generated FCF of INR 641mn post w/cap release of ~INR 1.2bn and capex spend of ~INR 1.2bn

* What we liked: Better than estimated profitability

* What we did not like: Lower-than-estimated volume; delay in recovery in bathware business

* Earnings call KTAs: 1) The management guided volume growth of high single digit (vs. earlier high single-digit to low double-digit) in FY26. It expects margins to normalise to double-digit from 4Q onwards. 2) In 2Q, demand remained subdued along with fluctuations in PVC resin prices. Further delay in ADD created uncertainty in the channel partners exerting pressure on domestic partners. It expects demand to recover in 2H. 3) The company expects PVC prices to have bottomed out. Given the ADD implementation, it expects improvement in pricing sentiment; can see a gradual upside of INR 5-6/kg. It expects CPVC prices to remain competitive; expects to remain stable, going forward. 4) Currently, it procures raw material from Lubrizol, however going ahead, factoring demand-supply scenario, it will be diversifying its sourcing for CPVC. Additionally, it will also launch own brand for CPVC as guided earlier; will announce details in coming days. 5) Expansion updates: i) It commissioned phase-2 operations at its Bihar plant in first week of Sep’25, taking the plant’s total installed capacity to 65.4kt. ii) Going forward, it expects no major capacity addition for existing line in FY27. However, there will be an expansion in new product lines for the piping segment; focusing in VAP which is expected to be launched by 1QFY27 having better gross margins. 6) On bathware segment, the company reported revenue of INR 120mn in 2Q (vs. INR 70mn YoY) and INR 220mn in 1H, while net loss stood at INR 50mn and INR 100mn, respectively. It expects to achieve breakeven in the next 4 quarters factoring the pan-India revenue flow. Aquel continues to strengthen its presence across new geographies with the launch of display centres in Jammu & Kashmir and Uttar Pradesh in 2Q. 7) No inventory gain or loss was reported in 2Q. 8) It expects depreciation quarterly run rate of ~INR 300-320mn. 9) Management expects total capex of INR 1.1bn in 2H.

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