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Topline Beats but Margin Headwinds Persist across Segments

HINDWARE delivered a mixed Q1FY27, with consolidated revenue growing ~ 18% YoY supported by a broad-based volume momentum across all three segments. EBITDA margin, however, contracted ~ 116 bps YoY, missing estimates, even as the company returned to profitability after reporting losses in the preceding two quarters. The Bathware segment maintained steady ~ 14% YoY revenue growth with encouraging sequential margin recovery, while the Pipes segment stood out on volumes with ~ 28% YoY growth, though flat realisation compressed margin sharply to ~ 3%. Consumer Appliances returned to positive EBITDA after Q4FY26 losses, though margin remains well below normal level.

Valuation:

We maintain our ‘BUY’ rating on HINDWARE with a revised target price of INR 290/share (INR 310/share earlier), reflecting a moderation in margin assumption. We value HINDWARE on FY28E EV/EBITDA multiple of 9x which, we believe, is conservative, given significant turnround expected in ROCE. We have also revised our estimate to: 1) FY26–FY29E Revenue/EBITDA CAGR of 15/30% for Bathware segment, respectively, 2) FY26–FY29E Volume/Revenue/EBITDA CAGR of 12/13/23% for Piping segment, respectively, driven by expected improvement in Real Estate and Infra activity and 3) FY27E/FY28E/FY29E EBITDA margin for Consumer Appliance business of 5.0/8.0/10.0%, respectively, owing to focus on profitable product categories. As a result, we arrive at FY26–FY29E consolidated Revenue/EBITDA CAGR of 14/33%, respectively

Risks: Possible slowdown in real estate and home improvement activities and higher raw material cost are risks to our ‘BUY’ rating

Q1FY27: Revenue Growth Strong; Profitability Turns Positive despite Margin Pressure

* Consolidated revenue came in at INR 6,253 Mn up 17.7% YoY & down 5.7% QoQ (vs CIE est of INR 6,327 Mn)

* Consolidated EBITDA grew by 2.8/13.3% YoY/QoQ to INR 501 Mn (vs CIE est of INR 545 Mn) and EBITDA margin compressed by 116 bps YoY to 8.0% (improved 134 bps QoQ) (vs CIE est of 8.6%)

* RPAT for Q1FY27 came in at INR 52 Mn vs the loss of INR 251 Mn in 1QFY26 (down 36.5% QoQ)

* Post JV-loss adjustment, the company has reported a PAT of INR 44 Mn vs the loss of INR 292 Mn and INR 189 Mn in 1QFY26 and Q4FY26 respectively

Segmental Results:

* Revenue from Bathware segment came in at INR 3,870 Mn, up 13.5% YoY, but down 2.5% QoQ. EBITDA margin down 72 bps YoY to 9.6%, but up 232 bps on QoQ

* Pipes segment reported volume growth of 27.7% YoY to 10.2 KMT, while it is down 9.7% on QoQ. At the same time, realisation remained flat on YoY to 149/kg (down 8.9% QoQ). As a result, revenue came in at INR 1,530 Mn, up 28.6% YoY (down 17.7% QoQ). EBITDA margin was down 261/1017 bps YoY/QoQ to 3.3%

* Revenue from Consumer Appliances segment came in at INR 851 Mn, up 18.2/6.0% YoY/QoQ. HINDWARE reported EBITDA margin of 7.2%, down 686 bps YoY as compared to negative 2.5% in Q4FY26

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