Anand Rathi Research
Target: ₹240
CMP: ₹
delivered a mixed performance in Q4FY26. Its revenue missed our estimate by 8.9 per cent on lower pipe volume of -0.5 per cent year on year vs.
ARe of 10 per cent, due to weak demand for agri pipe. The company appears to have again lost market share in Q4FY26, as it posted marginally negative pipe volume growth vs. healthy positive volume growth reported by its major peers.
The agri pipe volume was down 3 per cent, while non-agri pipe volume grew 6 per cent. However, its EBITDA sharply exceeded our estimate by 51.8 per cent driven by 1,065 bps rise in margin to 25.3 per cent vs. our estimate of 15.2 per cent, led by MTM inventory gain (₹35-40 crore) and better-mix.
The management has guided for high-single to low-double-digit volume growth with sub-15 per cent EBITDA margin for FY27.
The company targets to increase the share of non-agri pipe to 50 per cent over the next four-five years from 37 per cent in FY26.
The company does not have any major growth capex plan for FY27, as the management believes the current production capacity (520 ktpa) can cater to the near-term growth requirement. Budgeted capex is estimated at ₹100-200 crore for FY27e.
Considering soft volume in Q4FY26, we have slightly trimmed our EPS estimates by 4.6 per cent/0.1 per cent for FY27/28e. We maintain BUY rating on the stock with an unrevised TP of ₹240, valuing it at an unchanged multiple 20x FY27/28e EPS.