Buy Hindware Home Innovation Ltd for the Target Rs.310 by Choice Institutional Equities
Key Conference Call Highlights
Operational Performance
* HINDWARE has taken calibrated price hike to offset input cost inflation. Faucets: ~15% hike in January and additional ~3% in May and for Sanitaryware: ~6% hike in February and ~7% in April
* Exceptional losses largely related to Goodwill impairment (INR 340–350 Mn) in JV entity and shutdown of loss-making seasonal consumer categories
* Tier 1 & Tier 2 cities contribute ~35% of revenue, each, whereas the remainder ~30% comes from Tier 3 cities
* Market size: Sanitaryware INR 70–80 Bn and Faucets INR 130–140 Bn
Bathware Segment
* Sanitaryware and Faucets segments delivered healthy growth, while the Tiles segment remained affected by supply disruption
* Demand drivers: Focus on weighted dealers, premiumisation, further expansion in Tier-2/Tier-3 markets, higher institutional traction, improved brand mix and increased engagement with influencers
* Working capital days improved, from 103 days in FY25 to 89 days in FY26
* Capacity utilisation for sanitaryware segment stood at 82% and for Faucets segment at 89%
Consumer Appliances Segment
* Undertook portfolio rationalisation by exiting loss-making categories, such as air coolers, fans, air purifiers, water purifiers and furniture fittings
* HINDWARE reported improved product mix and sharpened category focus on kitchen appliances and water heaters
* HINDWARE plans to launch AI-enabled chimneys and continue premiumisation-led innovation across kitchen appliances and water heaters
Pipes Segment
* Witnessed a challenging quarter due to sharp increase in PVC resin price, from INR ~68/kg in January to INR ~114/kg in March before stabilising near INR 85/kg at present
* Roorkee plant ramp-up remains on track; management expects meaningful contribution from H2FY27 onwards
Management Outlook
* April performance across Consumer Appliances and Pipes was described as encouraging
* The management guided for 15–20% revenue growth in both, Bathware and Consumer Appliances, segments in FY27E
* Pipes segment volume growth guidance stands at 13–15% for FY27, supported by stabilisation in PVC resin prices, improved inventory availability, ramp-up of new Roorkee capacity and strong demand momentum witnessed in April and May
* The management expects consolidated EBITDA margin to improve by 100– 200 bps annually in the next two years through premiumisation, better capacity utilisation, manufacturing efficiency, higher-margin product launches and improved product mix
* The management expects Consumer Appliances business to turn EBITDApositive from Q1FY27E itself, driven by portfolio rationalisation, exit from loss-making categories, premiumisation initiatives and better product mix and operating leverage
* Bathware segment continued to outperform industry growth, with the management indicating market share gains in FY26 and expecting further expansion in FY27.
* The management targets debt reduction of 30–40% in next two years through stronger cash generation and lower capex intensity
* Demerger: Listing of demerged entities expected in the next 5–6 months, subject to approvals
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