Ladies and gentlemen, good day, and welcome to the Q4 and FY 2026 earnings conference call of Prince Pipes and Fittings Limited, hosted by MUFG Intime . As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Sumeet Khaitan from MUFG Intime . Thank you, and over to you.
Good morning, everyone. I welcome you all to the earnings conference call to discuss Q4 and FY 2026 results of Prince Pipes and Fittings Limited. To discuss the results, we have from the management, Mr. Parag Chheda, Joint Managing Director, Mr. Nihar Chheda, Vice President, Strategy, and Mr. Anand Gupta, Chief Financial Officer. They will take you through the results and the business performance, after which we will proceed for Q&A session. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to investor presentation and other filings that can be found on the company's website. With this, I now hand over the call to the management for the opening remarks. Thank you, and over to you, sir.
Thank you, Sumeet. Good morning, and thank you all for joining us for our quarter four and FY 2026 financial results. The presentation and the press release have been issued to the stock exchanges and uploaded on our website. I hope everyone has been able to go through the same. FY 2026 was a challenging year for the industry, shaped by volatile raw material prices, extended unseasonal rainfall and subdued demand across key end user categories. Additionally, significant fluctuations in PVC prices disrupted channel sentiment and created added uncertainty across the value chain. Despite these external headwinds, our focus remains steadfast on strengthening operational resilience while consistently advancing our long-term strategic agenda. We achieved our highest-ever quarterly volumes, delivering a healthy volume growth of 23% YoY in quarter four. For the full year FY 2026, our volume growth stood at 8%.
This performance reflects the resilience of our business model, the strength of our brand and distribution ecosystem, combined with unwavering emphasis on operational efficiency, cost optimization and focused growth initiatives. Innovation and portfolio diversification continue to be the key drivers of our long-term growth journey. During the quarter, we further expanded our product portfolio with the launch of DECILO, an advanced low noise PP pipe solution. Engineered with mineral-filled polypropylene technology, DECILO delivers superior strength, durability and chemical resistance while significantly reducing noise and improving flow performance. Designed specifically for modern infrastructure needs, this innovative solution is expected to enhance our product mix, deepen customer engagement, and reinforce our value proposition across key stakeholder groups. Alongside product innovation, we intensified our demand generation efforts in under-penetrated markets to expand our geographic reach and accelerate volume growth.
These strategic initiatives are enabling us to enhance competitiveness, remain agile in a dynamic marketplace, and strengthen our customer-centric approach. Facing sharp increase in polymer prices during this quarter, the company passed on inventory gains to the distributors and channel partners, thereby fostering distributor relationship and supporting faster inventory movement, which in turn enhanced working capital efficiency and reduced inventory holding costs. I am also delighted to share that we successfully completed the second phase of our asset purchase agreement with Klaus Waren Fixtures Private Limited for the strategic acquisition of the bathware brand Aquel. The acquisition includes land, building, machinery, manufacturing equipment and associated infrastructure at Bhuj, Gujarat, which will serve as a dedicated manufacturing base for our bathware operations. This strategic milestone significantly strengthens our diversification roadmap, expands our manufacturing capabilities, and positions us strongly to scale the Aquel portfolio in the growing bathware segment.
We also continue to strengthen our market footprint across high potential regions. During the quarter in our pipeware segment, we inaugurated a new experience center in Vadodara, Gujarat, further enhancing our customer outreach, market visibility, and brand positioning. These strategic investments reflect our commitment to establishing Aquel as a meaningful growth engine within our diversified business portfolio. Looking ahead, we remain cautiously optimistic about a gradual recovery supported by improving PVC price stability. Our continued focus on expanding geographic presence, accelerating innovation, enhancing operational efficiencies, and driving strategic diversification gives us confidence in our ability to navigate uncertainties effectively. We remain committed to capitalizing on emerging opportunities, delivering sustainable long-term growth, and consistently creating enhanced value for all our stakeholders. In conclusion, despite external headwinds, we are confident that our strong fundamentals, diversified product portfolio, and customer-centric approach position us well for a sustained long-term growth.
Thank you for your time. I will now hand it over to our CFO, Mr. Anand Gupta, to take you through the key financial highlights.
Thank you, Parag , and good morning, everyone. I will be taking you through the quarter four and FY 2026 financials now. Starting with quarterly highlights, revenue from operations stood at INR 850 crore, a strong growth of 18% YoY. Our volumes for the quarter stood at 62,167 metric ton, a robust growth of 23% YoY. EBITDA for the quarter stood at INR 110 crore, an exceptional growth of 100% YoY, while margin stood at 13%, registering a 500 basis point growth. Profit after tax for the quarter stood at INR 56 crore, a remarkable growth of 133% YoY. Tax margins for the quarter stood at 7%, a 400 basis point growth. Now for the full year FY 2026 highlights. Revenue from operations stood at INR 2,598 crore.
It grew by 3% YoY. Our volumes for the full year FY 2026 stood at 191,238 metric ton, as compared to 177,202 metric ton, same period last year, a growth of 8%. EBITDA for the full year stood at INR 232 crore, up by 43% YoY, while margin stood at 9%. in FY 2026, we have taken an exception of INR 2.05 crore net of tax towards estimated increase in provision for employee benefits arising from the implementation of the new labour codes. Profit after tax, after exceptional items, stood at INR 73 crore, registering a healthy growth of 70% YoY. Tax margin stood at 3%. During the year, we maintained strong momentum in expanding our distribution network and further strengthening our product portfolio through the addition of new products to support long-term growth.
Our working capital efficiency improved significantly in FY 2026, driven by sharp reduction in inventory and receivable days. Working capital days stood at 45 days in FY 2026, compared to 98 days in the corresponding period last year. Receivable days improved to 51 days from 61 days in the same period last year, while inventory days stood at 70 days as of March 31st, 2026. With this, I now end my speech and open the forum for question- and- answer session.
Thank you, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shravan Shah with Dolat Capital. Please go ahead.
Yeah. Thank you, sir. First of all, congratulations on robust performance across the board. A couple of questions. First, we'll try to get a broader guidance and then we'll try to come to understand what supported such a robust performance. Now, from here on for FY 2027, FY 2028, how one can look at on the volume growth and on the margin front?
Yes. Thank you for your question. I think if you have to look at guidance for next financial year, or current financial year rather, I think EBITDA should be closer to our normal guidance in the band of 11%-13%. For the full year. There could be few quarters of inventory gain and loss, but annualized, we see 11%-13% kind of operating margin and 12%-15% kind of a volume.
Okay. First, try to understand that this quarter, the entire growth that we have seen, 23% kind of a growth. If you can bifurcate both on the CPVC, PVC front and also maybe at a couple of places as you highlighted that you try to penetrate the market to get the volume. Also at the same time, in April and May, given the volatility in the CPVC prices, and now again, we are seeing it again, it is increasing. How the volume is there in April and May till now, whether that kind of a momentum is there?
If I look at last, the fourth quarter, the encouraging thing is that the volume growth was robust across the three months. Of course, the disruption due to the war happened in March month. Even if I look at the first 60-day period of the quarter, the volume growth was extremely high and in line with the overall volume growth of the quarter. First thing I would like to highlight is January, February, March, all three months, we have seen high volume growth. This has been a reflection of the aggressive pricing that we have now done. Also in March, we passed on the inventory gains to the channel partners to ensure that they are also competitive in the market.
The market, we are not interested in one or two quarters of inventory gain, but we are interested in sustainable increase of market share, which in such times of volatility, it becomes easier for a large player like us to gain market share when we have a strong supply chain of raw material. We have seen many such cycles, and I think few players tried to pass on costs overnight, which we felt was not the right strategic decision. That actually paid off because in April we saw a strong correction of prices also. Our channel partners had inventory, and in April they have also done de-stocking. But our channel partners have not faced heavy inventory losses like the channel partners of other industry players have.
As a result of that, we have not only improved our retail penetration, but we have also been able to add a lot of key channel partners in the past couple of months, from smaller players and from some peers as well. Coming to your question of category-wise volume growth, CPVC continues to be our highest growing polymer, followed by PVC, PPR, and HDPE. We see that trend going forward in the current financial year as well.
April and May also, we are witnessing the similar kind of the way we are looking at 12%, 15%. The similar kind of broadly, directionally, I'm not asking the specific number, but directionally the same momentum is there. The main point is, whatever the price increase which has happened in the Q4, obviously that would have helped all the companies to shift the inventory from company to the dealers. But actually now, whether it is actual demand is happening from dealer to the customer level or not, that's the point I'm trying to understand.
I'll answer your question in two parts. First is April, of course, we saw heavy de-stocking, and April volumes were obviously not good. But in May, we have seen a strong primary pickup because dealers have been able to liquidate their material. As a company, we have also shifted our focus from being a primary-oriented organization to now being a secondary-oriented organization. What I mean by that is a strong focus on increasing retail penetration. A lot of our schemes are now purposed towards the retailer, where we are able to do direct bank transfers from the company directly to the retailers, to ensure that whatever market share gains are there are more sustainable in nature. We have added thousands of retailers in the past couple of quarters.
And as a result of that, now our dealers are able to liquidate material at a faster rate, and hence that will also improve primary volumes in the long term. I hope that answers your question.
Yeah. Lastly, in terms of margin, now obviously it is good to see that we are again saying 11%-13%. Hopefully we should be kind of a middle level we should be able to achieve. But there, the point I want to understand is that obviously. Also if you can specify in Q4 what was the inventory gain and the prices which have fallen since, for April and some INR 4 hike has happened in May.
Broadly, directionally, can we see there will be inventory loss and maybe Q1 one can see a much lower margin and then from Q2 onwards we should be witnessing the kind of a margin improvement or the way you said that you did not pass on the prices so fast, so that the current margin, what we are trying to achieve, 11%, 13%, broadly should be on a quarterly basis, also it should be in the similar range.
No. One, if you are able to see our working capital management has been very strong, specifically from disciplined inventory. We have guided for 65-75 days of inventory, and we are in that range as we speak. What this means is not only better capital management, but also means that any inventory gain or loss shocks will be very low and range-bound from here on, and we have done this in the past couple of quarters. In Q4, inventory gain was, I would say close to zero, because it was passed on to the channel, which is why we were able to deliver a 23% kind of a volume growth. Going forward, I am not saying there will never be inventory gain or loss. That is nature of the business.
That will happen, but it will be extremely range-bound, which was not the case in the past. I would be candid enough to say we have learned from our mistakes, and now we have an extremely tight control on inventory. As a result of which, on an annual basis, the core profitability of the company will be very apparent. Quarterly, there could be up and down, but on an annual basis, it will definitely even out from here on. And specifically to answer the margin part, apart from inventory gain or loss, the mix of value-added products is very important. Our focus has been on growing CPVC, PPR. And apart from that, now we have also started in-house manufacturing of low-noise polypropylene pipes, complete in-house manufacturing. And state-of-the-art, best-in-class quality product that we have, known as DECILO.
From this year onwards, revenue contribution from DECILO also would start, which will help improve product mix, and as a result help gross margins also improve in the long-term.
Okay, great, sir. Thank you and all the best.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. The next question comes from the line of Sneha from Nuvama. Please go ahead.
Hi, team. Congratulations on great numbers, and thanks a lot for the opportunity. A couple of questions from my end. One, you said that you are looking at margins sustaining between 11%-13%. What I am able to understand is, you said that you did not have any inventory gains in this particular quarter. Could you tell us the reason why your margin then, on a quarter-on-quarter basis or even compared to nine months basis have improved substantially? And what is the reason that it could sustain at around similar levels?
In Q4, we did not have any inventory losses, Sneha, and in the first nine months, of course, we had huge inventory loss. As a result of no inventory loss. So three reasons. One is no inventory loss. Second is very strong volumes, record high volumes for the company of 60-80 per quarter. That obviously got in a lot of superior cost absorption. And third is a very strong product mix, specifically coming in from CPVC and PPR for the fourth quarter. So product mix, operating leverage, and lack of inventory loss helped us have a strong operating margins in the March quarter.
Understood. And your confidence in the volume growth path, Nihar, are we seeing strong demand uptake at this point of time on the agri side, plumbing side? Where is the demand coming from? Because volatility in PVC still continues.
Volatility in PVC continues. April was weak for the industry because channel partners had high inventory. But because our finished good was competitively priced, even what we sold in March, their secondary sales of channel partners continued to be strong in April, which is why from May, we have seen strong demand across plumbing and agriculture. But specifically for us anyway, plumbing and drainage is two-thirds of the portfolio. So that part of the demand continues to be strong in the current month, and we foresee that over the next couple of months and beyond that also, demand should remain strong for the larger players. Because what we have also seen is significant consolidation in the kind of volatility that we saw, not only in fourth quarter, but even the nine months before that, small players were struggling because of the large inventory losses and subdued demand environment.
Then in the fourth quarter when there was this kind of a chaos of the war and one-way increase in prices, smaller players were not able to serve the demand. As a result of which, we also had market share gains and a lot of new distributors also we have been able to add. So we see consolidation also happening at a faster pace in the past year, and we should yield those dividends in this short-term and long-term future.
Sure. One last one, Nihar, if I may. But with regards to your distribution network, you said that you've added distribution network. Could you tell us how many distributors you would have added net in this particular year? Also, in case you can highlight if, because you're going more towards the retail, is there any loss of distribution network also in this year?
No, I think net, we have had addition of distributors and especially what is encouraging is in our white spaces, which were typically weaker markets in some pockets of South and East India, and as well of our stronger markets of North, Central, and West. Across, we have been able to add distributors in white spaces during this kind of volatility.
Thank you. The next question comes from the line of Keshav Lahoti with HDFC Securities. Please go ahead.
Hello. Hi, thank you for the opportunity. Firstly, congratulations on the strong set of numbers. I want to get a sense. Last quarter, I remember the EBITDA margin guidance was 10%-12%. Now, in a way, you have upgraded it to 11%-13%. So the reason for the same, you have a better confidence on margin now? And secondly, this margin guidance, is including or excluding bathware losses?
It is including of all. I would not read too much into it. I think the- a m I audible?
Yeah, you're audible.
Yes, sir, you're audible. Please go ahead.
I think the margin guidance is in that same range, so I would not read too much into it. I think we are confident of achieving that kind of 11%-12% kind of EBITDA including the bathware losses.
Understood. Got it. Sir, how has the channel inventory been during January to March and April? I just want to, without getting in number, possibly because as you highlighted, there has been destocking in April, so whether due to destocking, whether the volume have de-grown?
Yeah, we have seen. April was challenging for the entire industry, which was expected due to high restocking in March. But over the past 12 months, we continue to focus a lot on improving our retail penetration and improving our sustainable market share at the secondary level. As a result of which in May, we have seen a strong revival and a strong demand in the first 15 days of the month, which we continue will continue for the rest of the quarter and for the time ahead as well.
Got it. Sir, as you have now launched your own CPVC brand four, five months back, so how are your things going on that side on both margin side and the volume growth? Can you give some sense how has been your CPVC volume growth for Q4 and as well as for FY 2026?
Yeah. Volume growth has been higher than what our company volume growth is. You know that as of annually, it is 8%, for the quarter it is 23%. This has been higher for CPVC. Post our own brand of SmartFit Plus in CPVC, we have seen extreme competitiveness in our finished good, which was a conscious strategy. As a result of which, we are seeing the market reward us in terms of better acceptance across retail and projects. We have made better than what we had expected in the first couple of quarters. After leaving Lubrizol, we have seen a very strong volume growth, and we believe that this will continue going forward.
Understood. Secondly, your prices are more competitive. I understand you have passed on the gains also. So you have passed on entire gain or possibly this is also helping you in aiding you in better margin also?
Yeah, it is one of the levers which is helping us improve margin as well. We have retained some of the benefits, but most of the benefits have been passed on with a view to gain market share in CPVC.
One last question from my side. How has been-
Sorry, Keshav, Sir. I would request you to please come back in the queue for further questions.
Yeah.
Thank you. The next question comes from the line of Anu Parakh from Anand Rathi. Please go ahead.
Yeah, thank you. Sir, I just wanted to understand that our sales volume has grown at just 5.7% CAGR over the last six years, and our EBITDA margin is around 9% band for the last four years. Just wanted to get a sense as to what has changed at the industry level that gives us the confidence of giving such a robust guidance on both volume and margin front.
If you see last year, we have posted volume growth of 8%. If you see March quarter, we have posted volume growth of 23%. We are seeing immense consolidation in the industry, where not only smaller players are struggling, but some of the larger players are also struggling because of lack of control on the market. As I stated, we have added a lot of new products, along with that, added a lot of new channel partners due to this consolidation. As a result of both, we believe that the kind of growth that we have had in the past year, we will be able to build on that for the next couple of years.
Okay. Sir, how has been our agri pipe demand in Q4 and how it is shaping up in the current quarter?
If you see, we are majorly a plumbing and drainage pipe company. Agri is less than 30% of our revenue, and agri tends to be more price sensitive than the plumbing. Our bandwidth is purely on the plumbing and drainage part portfolio, where there is better level of brand consciousness, and we can keep adding new products, focusing on adding channel partners, and grow the business. Agri is important from a cost absorption and a reach, especially in rural India point of view. I would say that demand has been healthy, but majorly the demand tailwinds have been in the building material part of the portfolio.
Okay. Last question, how is the competitive intensity in the plastic pipe sector? Like earlier, we were providing incentives to dealers because of the competitive pressure. Can you just quantify whether there has been any change in the incentive structure in the current quarter? Also if you can quantify the incentive amount which you are currently providing to a dealer.
Like I said, I think competitive intensity has reduced from a point of view that consolidation has happened. Of course, large players like us continue to be aggressive in terms of pricing and the incentive that we give to the channel. But we see that if we are aggressive in pricing, the market is rewarding us with volumes because we are seeing immense consolidation with smaller players also moving out of the market and some of the larger players are also struggling. We see that this is a very good time for someone like us who has put up capacity ahead of the curve to be able to make some sustainable market share gains across our product portfolio.
Thank you. The next question comes from the line of Varun Julasaria with 360 ONE. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. Sir, could you just quantify the bathware revenue and losses for this quarter?
Revenue is INR 16 crore and loss is INR 5 crore for this quarter.
Okay. On the working capital, we saw fair bit of increase in the payable days as well and a reduction in debtor days. How sustainable is this kind of working capital? I just want to understand what is the sustainable debtor days and payable days that we are aiming for. You mentioned about the inventory days, but the other two.
See, what is in our control is debtor days and inventory days, and I believe any sustainable decrease in working capital days and further optimization can come only from these two levers. Payables is a function of whether we are importing more or buying domestic raw material. It's always going to be dynamic. But any sustained decrease in working capital can come only from debtors and inventory, which we have seen in the March quarter. So debtor days now has come to around 50 days, which used to be around 60 days. So our endeavor is to bring this further down by another 10 - 15 days by the end of this financial year.
Okay. And sir, on the gross margin front, is there any thought process like how much do we wish to maintain? Obviously, we can reduce the price further, but on a per kilogram basis or percentage basis, that kind of gross margin that on a PVC side, how much we want to maintain?
See, there are three or four levers for gross margin. One is of course, the pricing. Apart from that, which is also the product mix and more contribution from value-added products, like CPVC, PPR, now PP will be helpful going forward and our management bandwidth is towards how do we increase our share of value-added products. Third is also we would have long-term decentralization benefits as well with now our large plant in Bihar. We will have a lot of freight savings, which right now we have passed on to the channel. But eventually, once we hit the right capacity utilizations, these benefits also will accrue to the company at the gross margin level itself. So I think pricing, product mix, and decentralization benefits, and new product initiatives, I think these are the four levers to have strong control on gross margin going forward.
Yes, that I understand. But sir, any thought process like we want to have this much of markup on PVC, like this quarter we didn't pass on. Next quarter since there's so much decline, is there any per kilogram value add we want to mark up that we want to sustain?
No, I don't think we see it from that perspective. That's a function of demand and supply for that particular quarter and also a function of how our costing is of raw material at that time. So it's a function of multiple. Very good.
Okay. And lastly on the-
I am sorry to interrupt, Mr. Varun. I would request you to please come back in the queue for further questions. The next question comes from the line of Praveen Sahay with PL Capital. Please go ahead.
Yeah. Hi, sir. And many congratulations for a good set of numbers. My first question is related to the capacity utilization, and I understand that the Begusarai facility has now full capacity we have with us, so the utilization is on the lower side. If I exclude them that as well, our utilization is not at the full level, 50% odd level, it is a utilization. If I just excluding the Begusarai. So how you are geographically give some indication that is the ramp-up of your capacity way forward.
In fact, Bihar capacity utilization is healthy as we speak. So 60% kind of utilization we have already hit at Bihar. So few other plants we are working towards improving utilization, and that is obviously a direct function of market share. Traditionally, South has been a market where we have lagged our peers and lot of capacity expansion has come in South. But maybe the market share growth has not been in line with the capacity expansion. So further focus will be towards growing South market, which is a huge market, and couple of the large players in South are struggling. So there is an opportunity to ramp up utilization, and once that happens, I think overall at a company level as well, the utilization numbers will be much better.
Thank you. Next question is related to the RM procurement. If you can highlight how is your strategy of a domestic international RM procurement or the continuous from the large players or to some import dependency from the trader, how is the mix and the strategy for the RM procurement?
Yeah, we want to be extremely disciplined with inventory management, which we have already shown in the last financial year, where there is a very tight control on inventory, especially in these volatile times. So we have a strong supply chain so as to we never have material insecurity and even when there is non-linear surge in demand, we should have the ability to serve that, especially with the kind of capacity we have. So we need to balance between tight inventory days and a strong supply capability, which we have demonstrated in the past year and the past quarter. So with our current mix of domestic and import, we would be able to keep our inventory in the 65-75 day range. This includes both raw material and finished goods.
Thank you, sir. All the best.
Thank you.
Thank you. Ladies and gentlemen, you are requested to limit your questions to two per participant. The next question comes from the line of Utkarsh with Anand Rathi. Please go ahead.
Yes, sir. Good morning, sir. My first question is regarding the plumbing pipe demand at the industry level. What we are seeing that there has been a significant increase in the prices of the construction material across the board. Are you seeing any signs of slowdown in the pace of new projects on the ground? Can you also give some sense for the plumbing pipe demand at the industry level, how it is shaping up in the rural and the urban pockets?
We have seen good growth across urban and rural. Yes, I would acknowledge that there is a major sharp escalation of costs for real estate developers. Till now, we have not seen any kind of postponement of demand. Pipe anyway is a non-discretionary product for any building materials, for any building. We do not foresee. I would say any slowness in real estate will be sort of subsidized by the kind of consolidation we are seeing in the industry. I think larger players in piping will continue to do well and that is why we are optimistic about the current financial year kind of growth that we can see in the plumbing and SWR pipes.
Okay. Just lastly on the gross effect turn side, sir. Prior to the COVID, we were hoping at around 3x on the gross effect turn, which has now gone down to around 1.5 x or 1.6 x in FY 2026. Just wanted your sense, what should be the normalized gross effect turn on a sustainable basis and by when you expect to reach to that level and what would be our CapEx guidance for this fiscal year for FY 2027?
As Nihar had mentioned that the South plant has not been operating at the optimal level. If we consider that to reach at optimal level, our turnover should be around 2.5 x of the gross block. That should be decent enough and with that we will be around 60%-65% of our overall utilization. The CapEx which you ask about FY 2027 plan, it will be in the range of INR 200 crore, which includes CapEx to maintain for our existing plant and some of the debottlenecking plan which we have for our two or three plants. That includes the actual completion of Aquel as well, which happened in April. That includes INR 245 crore is included in INR 200 crore, INR 210 crore.
Okay. This 2.5x gross effect and which we are targeting, by when we can expect to reach to that level? Maybe a certain time frame over the next three years, five years.
Correct. It would be over the long term.
Okay. Thanks a lot.
Thank you. The next question comes from the line of Sonal with Prescient Capital. Please go ahead.
Sir, I am Sonal Minhas. I hope I am audible.
Yeah.
Sir, I just wanted to understand your working capital cycle from the context of creditors. When the last PVC cycle was up after FY 2020, in FY 2021 and 2022, when the prices were up, we saw a surge in your creditor days. We see it again now. Is there something to read here in terms of buying behavior? Who are your creditors, if you can? I just wanted to understand that.
I don't understand the question.
I'll repeat again the question, sir. We saw an increase in your creditor days in FY 2021 as per the chart given on slide nine in FY 2021 and 2022. We are seeing a surge again in FY 2026. Is there something to read here? Back in 2021 and 2022, the PVC prices were again up, and hence just trying to make sense of this data.
No, I don't think there is any correlation between.
Okay. All right. Can you just explain who are your creditors? Are there some concentrated creditor lines or there are some vendors who are large or small? If you could explain that.
Yeah, we have Reliance, Chemplast locally, and then we import from across the globe, North America, Japan.
Got it, sir. Got it.
Thank you. The next question comes from the line of [Shashank Goel] with [Vayora Capital]. Please go ahead.
Thank you so much, sir. Firstly, a very good congratulations on the set of numbers. Sir, my first question is, how does our pricing today compare versus the market leaders in PVC and CPVC?
In PVC and CPVC, we are both at par with the market leader in terms of pricing. It could vary from geography to geography, but at a pan-India level, pan-India average, we would be at par in PVC and in CPVC.
Sir, my next question is, what is the steady state of the margin, like the operating margin profile for us? At what should it be steady for us? What percentage margin or operating leverage?
At an annual level, 11%-12% kind of operating margin.
Okay. Sir, one last question, sir. Over the last three years, we have lost volume market share. What was the primary reason behind that, and what sort of growth plan we have going forwards?
I would not say that we have lost market share. Our growth has been slower than couple of peers, but it has always been higher than industry average. Yes, there was scope to have better volume growth, but we have not lost market share. If you see the past couple of quarters now, we are back on track in terms of volume performance. Going forward, basically, focus remains on network expansion, adding new, not only distributors, but adding new retailers across the country, having direct retailer schemes where company has direct bank transfers to lakhs of retailers across the country. A strong pipeline of new products, which are value-added in nature, which we will completely manufacture in-house. So it is going to be a function of network expansion, stronger retailer penetration, innovative products which help us improve our range and our product mix over the long term.
And of course, a consistent investment into brand-building activities across the country.
Okay.
Thank you. The next question comes from the line of Bhavesh with DV Investment Advisors. Please go ahead.
Hello, am I audible?
Yes.
Hello.
Yeah.
So if you can share the total inventory gain for the quarter and how much was retained and how much was passed on to the channel?
We have had no inventory gain in quarter four. It has been passed on to the channel to improve our competitiveness.
Okay. That was completely passed on.
Yes.
Secondly, you stated that the demand was strong throughout the quarter, in January, February, and March. So can you state the underlying reason what has driven this demand throughout the quarter?
One, in the first two months, we saw stability of pricing, which was helpful.
Okay.
Then, of course, in March, we saw an upsurge in pricing. So one is we had tailwinds as far as raw material was concerned, and apart from that, I think I've already stated the initiatives that we are taking in terms of expanding the market reach and expanding our new product portfolio.
Okay, understood. Thank you so much.
Thank you.
The next question comes from the line of Karan Gupta with ACMIIL. Please go ahead.
Yeah. Hi. Am I audible?
Yes.
Yeah. My question is regarding the capacity utilization. For the annual year, what was the capacity utilization? Is it around 60%, you said?
60% was mentioned for the new plant, which we operated for nine months, I'll say, on a capacity what we have built in. For overall, the number is around 52%.
52%?
Yeah. On production capacity, 52%.
Okay. You said the volume growth or the operating leverage this time around for this quarter. What was the capacity utilization before, I mean, in quarter three, and what is the utilization in quarter four? Just trying to understand the operating leverage in terms of volume is also grown.
Volume has-
What has benefited in the margin side? How much operating leverage is got this time, this quarter?
I cannot quantify operating leverage like that, but in quarter three, you see we have done 42 kilotons. In quarter four, we have done 62 kilotons. Obviously, in terms of net revenue also, there is a large increase primarily driven by the volume growth. As a result of that, there is superior cost absorption. As you know, most of our costs are variable or semi-variable, fixed or semi-variable in nature. As a result of which we have strong operating leverage. With better volume growth, we will always have better cost absorption.
What is the guidance on increasing the capacity utilization from here on 50%, 52%? What is the constraint here to not able to take it maybe on 60%, 65% or 70% on an overall basis?
We have already guided for 12%-15% kind of volume growth. Our aspiration is much higher than that, and we do have the capacity. We are also building stronger infrastructure this year. We will be doing some CapEx towards improving our storage capacities across plants, which will further help us increase our supply chain and our utilization. The point is you need to understand that demand does not increase in a linear way.
Yeah.
There is always going to be a non-linear upsurge in demand. If you see one of the reasons that Prince has become one of the top players in the piping segment is one of the core reasons has been putting up capacity ahead of the curve, and having that risk appetite to put up that capacity. First couple of years, it can look like low utilization. Whenever there is an uptrend in demand, we are able to serve it. I think quarter four also is a testament to that. We are a debt-free organization with a very robust balance sheet. We are extremely bullish on the growth that India will see, and specifically in building material, infrastructure, agriculture, and water storage. The verticals that we operate in, we are extremely bullish over the long term. We do not look at quarter-to-quarter kind of demand scenarios.
We are adding capacity with an extremely long-term view, and we do have the risk appetite and the strength of the balance sheet to be able to take these calls. We are extremely optimistic in our ability to deliver that kind of volume over the long term.
Thank you. The next question comes from the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Thank you, sir. Sir, on the bathware front, last time we were saying that we will be having a break-even in Q2 or Q3 of FY 2027, then we will be reaching a INR 25 crore -INR 30 crore quarterly run rate. Is there any change in stand there?
No, I think quarter two, quarter three of next financial year of FY 2027, current financial year is what. We target to hit that kind of run rate. We have done around INR 16 crore in fourth quarter and at around INR 20 crore, INR 25 crore, we will hit that breakeven mark.
Got it. And sir, in terms of, Anand sir has mentioned that we will be having two, three plants de-bottlenecking. Just trying to understand. Current installed capacity for like 35,000 kilotons or so, how much one can look at by end of FY 2027 and maybe FY 2027 or so, some 5,000 kilotons, 10,000 kilotons increase?
This is only for certain product categories at certain plants. This also includes some civil investments that we are making in terms of warehouse management, state-of-the-art warehouse management at our plants. So that during lean periods, we still are able to ramp up inventory so that during the season we are able to deliver that kind of volume. The de-bottlenecking is specific to a couple of plants, only for specific product categories, where we feel that we need to do some slight de-bottlenecking. But majority of the CapEx is towards maintenance, improved storage capability, and the Aquel acquisition, which was already completed in the past month.
Okay. And sir, broadly, in terms of the value added, if I have to look at in terms of the share in revenue, for Q4 or maybe FY 2027 or FY 2026, what's the broader share and how, as you said that even DECILO will also start increasing the revenue. Just trying to understand how this share will keep on moving forward.
This would be in the range of 23%-24% in FY 2026, and this has to move towards 27%-28% next year. I don't like to look at it in terms of contribution because our core segment of PVC also we will be growing. It's just that the rate of growth will be higher in the value-added segment. But basically, improvement in value-added contribution will come from stronger growth in CPVC, PPR, and with DECILO launch. I think by next year we should hit 27%-28%.
Thank you, sir. The next question comes from the line of Praneet with SJ Investments. Please go ahead.
Hi, management. Thank you for the opportunity. The company was mentioning about adding a lot of dealers during this quarter and during the year. Could you explain how has been the dealer trend over the last years and what is likely to be the trend going forward in terms of the exact numbers on how many added? Are we expanding our team in terms of dealer acquisition and all of that? Could you just shed some light on that too?
Yeah, the yield per distributor can vary. We have distributors doing INR 50 lakhs per annum, and we have distributors doing INR 100 crore per annum. So number of distributors may not be the right correlation. What's important is adding the right distributors who have the right infrastructure, right retail network, ability to invest in the business, and more importantly, we want to add distributors in white spaces, which are weak markets, weak districts, which we have mapped out at a taluka level. So adding that right reach of distribution is important with the right kind of partners. Specific numbers may not be as important, but the reach has significantly increased and will continue to increase as the industry has seen major consolidation.
And we have strengthened our sales team in terms of numbers as well, to ensure that we have a better reach of the network in the long term.
I understand that. I was just curious because of the numbers, because I understand broadly it can be very varied in terms of numbers, but in terms of the sales channel expansion and all of that, I'm just curious. Numbers would be easier for us to understand than just a broad-based guidance on strengthening. Would that be possible to give some numbers?
Yeah, I think offline you can connect with us. I'm happy to share.
Understood. In terms of the inventory, going forward, you just mentioned the fact that we normalize trade over to reduce the amount of overall business and reduce the working capital. Could you explain where do you see the inventory and overall working capital size normalizing, specifically in terms of inventory, where do you see? Remaining, where do you see it going forward for the next one year and the next years also? Where do you want it to come to?
I think already we are in control as far as inventory is concerned. Inventory we have normalized. 65-75 days is our guidance, has been our guidance, and we are within that guidance. This includes both finished goods and raw material inventory. Any sustainable decrease in working capital has to be driven by disciplined inventory and reduction in debtor days, which is, I would say, a KPI for the management and the CXOs. Currently we are at around 50 days, and we would like to reduce this by another 10 days in the next four quarters.
Thank you. The next question comes from the line of Tia with Sapphire Capital. Please go ahead.
Hi, sir. Thank you for taking my question. What CapEx are we planning for this year?
Around INR 200 crore -INR 210 crore is the planning for FY 2027. That includes the second tranche of Bhuj as well.
Okay, sir. What utilization are we expecting to end the year with?
Of the production capacity, we intend to have around 58%-60%. If the guidance of 15%, we achieve to get the volume.
Okay, thank you.
Thank you. The next question comes from the line of Deepak with [WealthWise Vision]. Please go ahead.
I just wanted to understand, what is the ratio of projects business to your overall business?
I think as we stand it is around 70/30. 70% retail and 30% projects.
What would have been the growth of projects business since, say, last quarter?
I think quarter-to-quarter we would not track the ratio, but I think maybe around one and a half, two years ago, projects used to be around 25%, which is now around 30% of the revenue.
Okay. Just a general question on how the overall demand scenario in the building material sector. Considering the results which other pipe companies have posted, electric wire companies have posted, tile company has posted, it looks like building material has kind of turned around after, let's say, seven, eight quarters. Is it the case or is it just a temporary demand because of this volatility in prices or raw materials, so dealers are stocking up. What is your opinion on that?
No, of course, we have seen restocking, but like I said, that restocking happened only in March because of the price increases. But even in January and February, we had strong volume growth because of our price competitiveness and the initiatives that we're taking in terms of expanding our distribution channel, retail channel, and our product portfolio. Yes, 23% is not sustainable. Of course, the restocking has a part to play in that. But overall, we are seeing a lot of these initiatives that we're driving, along with consolidation where larger players are doing well and smaller players are going through extremely tough time. Any kind of volatility, both upward and downward, is tough for the smaller players to survive.
In terms of if you're tracking secondary sales, primary, I understand there's been a growth of 23% in volume. What would it be in terms of secondary sales?
Yeah, secondary sales also, we have seen strong growth. Especially when in April, when primary was weak, we have seen that distributors have been able to liquidate material into the retail market aggressively because we shared our inventory gains. We have seen even when prices reversed in April, distributors were able to liquidate materials. I will say smaller players are still having supply issues over the past couple of months. So big players will continue to get bigger from here.
Okay. Thank you. Thank you and all the best.
Yeah, thank you.
Thank you. Ladies and gentlemen, in the interest of time, that was the last question for today. I now hand the conference call over to the management for closing comments.
Thank you, everyone.
Thank you. On behalf of Prince Pipes and Fittings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.