Buy Hindware Home Innovation Ltd For the Target Rs. 253 by Choice Broking Ltd
HINDWARE Revenue/EBITDA/PAT below street expectations
* Q3FY25 consolidated revenues came at INR 5,941 Mn, (vs Consensus est. INR 6,546 Mn), down 13.6% on YoY and 5.7% QoQ.
* Consolidated EBITDA for Q3FY25 was reported at INR 294 Mn, (vs Consensus est. INR 321 Mn), down 43.8% on YoY and 1% QoQ and EBITDA margins declined by 266bps on YoY to 4.9%, whereas it improved by 23bps on QoQ.
* PAT for Q3FY25 reported at INR -169 Mn, (vs Consensus est. INR -107. Mn), vs INR 670 Mn in 3QFY24 . EPS for the Q3FY25 came in at INR -2.2.
Bathware segment poised for turnaround under new leadership : Bathware Segment (contributes 56% of total revenue) sales declined by 12% to INR 10,241 Mn as of 9MFY25, but a rebound is expected in the next 2–3 quarters, driven by strong institutional sales and pricing actions. Institutional sales increased to 22% of total sales in 3QFY25, up from 19% in 2QFY25, while Faucet products saw a 4.7% price hike. Additionally, management is focusing on product portfolio expansion and branding efforts. To strengthen the segment, Mr. Nirupam Sahay (Over 30 years of leadership in blue-chip companies) has been appointed as CEO of the Bathware business. His expertise is expected to support the segment’s recovery to normal levels.
Capacity addition will lead to volume growth: The Piping segment (contributes 30% of total revenue) recorded strong volume growth of 11% to 31,844 MT as of 9MFY26, with capacity utilization at 77%. We expect a 12% revenue CAGR over the next three years, driven by a 14% volume CAGR. To support this growth, Hindware is investing INR 1,800 Mn in a new Roorkee (Uttarakhand) facility, expanding pipe capacity by 12,500MT P.A. (scalable to 25,000MT P.A.), bringing the total to 66,500MT P.A. CPVC contributed ~38% of Piping revenue as of 9MFY25, which is expected to drive a 100–200bps margin improvement
View and Valuation: We revise our FY25/26/27 EPS estimates significantly downwards by 109.2%/53.3%/38% due to poor performance till 9MFY25. However, we anticipate the Bathware segment to rebound, driven by management changes, product launches, engagement with influencers, new hiring's in project business. While the Piping segment is set for 14% volume growth, supported by capacity expansion and market share gains and new product launches. We maintain our ‘BUY’ rating with revised target price of INR 253, valuing the company at 23x (Unchanged) FY27 EPS.
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SEBI Registration no.: INZ 000160131
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