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The top line of the company has declined by 10.1% YoY basis to Rs 6.29bn vs our estimates Rs.7.01bn backed subdued real estate demand. Bathware segment revenue de-grew by of 9% to Rs 3.6bn vs CEBPL est of Rs 4.08bn and margins declined by 664bps to 9.5%. Pipes segment reported a revenue decline of -7% on YoY to 1.87bn vs CEBPL est of 1.89bn due to decline of RM prices by 9%,whereas company saw a flattish volume growth of 1% on YoY basis to 10,396MT, Pipes Realization down by 8% YoY led to decline in EBITDA/MT by 42% to Rs 12,216 and margins down by 400bps YoY to 6.8% in Q2FY25. Consumer Appliance segment delivered a revenue decline of 14% on YoY basis to 825mn vs CEBPL est of Rs 1,040mn backed by muted demand.

* Capacity expansion Pipes: Hindware via its brand “TRUFLO” has done excellent sales growth to Rs 7.7bn in FY24 a revenue CAGR of 43% over FY19 to FY24. overall pipes volume up by 1% YoY to 10,188MT and 11% in 1HFY25 to 20,584MT and we expect going forward Volume/Revenue to grow at CAGR 16/18% over FY24 to FY27E and anticipates going forward the revenue contribution from this segment to increase from 28% in FY24 to 36% by FY27E. To capture ongoing demand Hindware expanding and putting up the new capex in Roorkee (Uttarakhand) of Rs 1.8bn and increasing pipes capacity by 12,500MT P.A (expandable up to 25,000MT P.A.) after this, total capacity will be 66,500MT P.A. and this project is expected to complete by 4QFY25, this capacity will also lead to reduction of logistic cost and margin improvement of 1 to 2%.

* Muted Demand Undermines Growth in the Bath ware Market: Bathware segment revenue de-grew by 9% to Rs 3.6bn, whereas launching of new products in faucet were segment and better product mix has helped to maintain market share. The revenue share from Faucet were stands at 41% and sanitary ware stands at 59%. The gross margins mainly down due to lower sales and increased RM prices, overall brass price up by 10% YTD , Management has combined both sanitary were and faucet were business which led to increase of employee cost by 25%.

*  Subdued Demand In Consumer Appliances: The Consumer Appliance segment revenue degrew by 14% YoY to ?825mn due to lower sales of kitchen appliance and Cooler season was there in 1Q only, HINDWARE retained its leading position in the kitchen appliances segment. The company is actively expanding its kitchen appliance portfolio, leveraging its strengths, and streamlining product offerings to enhance margins amidst rising inflation and increased competition.

* View and valuation: HHIL to witness healthy Revenue/EBITDA/PAT growth of 8/19/59% CAGR over FY24-27E backed by 1) Strong position in bathware 2) greater presence in Pipes & fittings and consumer appliance 3) Strong brand call 4) strong distribution reach and better product offerings Further its upcoming new facility in Roorkee and strong presence in Bathware segment will likely to improve the overall profitability of Hindware Home’s (improvement in margin by 300bps over FY24 to FY27E from 8.5% to 11.5%. We like to change our rating from BUY to Hold rating on the stock led by with a TP of Rs. 297 (23x of FY27 Sept EPS).

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