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We are revising our growth assumption for Prince Pipe on account of the following reason:
Recent performance & Challenges: In 9MFY24 Prince Pipe's revenue has declined by 6.1% YoY, attributed to a 13% YoY drop in realization. Volume growth remained modest at 7% YoY compared to industry growth of mid-teen. The Q3FY24 further highlighted challenges with a 2.4% decline in volume and a 12.4% decrease in revenue largely due to market share erosion from pricing issues and ERP transition challenges.
Management Response: In response to these challenges, management is implementing corrective measures, including ERP system normalization and competitive pricing strategies. The management is hopeful that these initiatives will realign the company's revenue growth with industry standards by FY25.However, the effectiveness of these measures in the face of intensified competition and market share recovery remains uncertain. Below is the commentary from management regarding growth.
(Source: Q3FY24 Earning transcript)
Valuation & MRP Update: Reflecting our cautious outlook on Prince Pipe's ability to navigate these challenges and regain market share, we are revising our EPS growth assumption earlier 28% (on a lower base) to industry growth rate of 15%, thus valuing the company at a P/E of 22x FY26 earnings, leading to a revised MRP of Rs. 521.
Disclosure: MoneyWorks4me's employees may have exposure in the securities mentioned in the above report. For detailed disclosure click here.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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