Buy Hindware Home Innovation Ltd Ltd For Target Rs. 803 - Yes Securities
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We hosted Hindware Home Innovation Ltd. at our conference wherein we interacted with Mr. Naveen Malik (CFO), following are the Key highlights from the same:
Pipes & Fittings Segment
* Demand for CPVC products is sluggish in Q2FY24 (seasonality impact), however for PVC Pipes demand from both agri & plumbing remains robust. Due to lower revenue share of CPVC products in Q2FY24, management expects margin to remain under pressure.
* Management anticipates demand for CPVC products will recover in H2FY24. Company reiterated their guidance of delivering a Rs10Bn revenue from pipe segment by FY25E.
* Uttarakhand plant will have capacity of 25,000MTPA (12,500MTPA in Phase I & Phase II each). Phase-1 is expected to commence production from Oct’24.
* Capacity utilization for pipe segment is 80-85%. ? CPVC product prices & quality are at par with their peers.
Bathware Segment
* Demand for premium segment products is healthy while for demand for mass market products continue to remain sluggish in Q2FY24.
* Company has revamped its distribution system in FY22 that has increased its reach. Company has also appointed separate sales team for sanitaryware & faucet division.
* Company is expecting higher growth for faucets in next-couple of years and expects revenue share of faucet to reach 50% of bathware segment.
* Sanitaryware biz has margin of ~19% while faucet has ~12%. Management expects margins to remain steady at ~16% for this segment.
* Capacity utilization for Sanitaryware/ Faucet was ~85%/~50% respectively.
* Mix between inhouse and outsourced manufacturing is ~50:50.
Consumer Appliance & Retail Segment
* Demand for Kitchen appliances is healthy. Higher channel inventory impacted revenue for Fan’s while sales of air coolers were lower in Q1.
* Company has gradually phased out air purifiers and plans to sell water purifiers only through online channel.
* Management plans to Sell-off the retail biz in near future.
Others:
* HHIL has launched mobile based app for order placement for dealers/distributors and DMS to track secondary sales of inventory.
* Share of project biz is ~30% on blended revenue.
* HHIL plans to repay Rs1Bn debt every year via internal accruals.
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SEBI Registration number is INZ000185632
