2 Mid-Small Pipes Stocks Are Seen To Rise By 11-25% Ahead; Goldman, JM Recommend BUY

Two industrial plastic products makers, Astral and Prince Pipes and Fittings rose as much as 2-4% on Thursday after leading brokerages like Goldman Sachs and JM Financial initiated a buy on the two stocks. There is potential for 11% to nearly 25% upside in the two companies.

Prince Pipes And Fittings Ltd:

After rising by 4.12% to an intraday high of Rs 632.40 apiece on BSE, Prince Pipes's share ended at Rs 612.50 apiece up by 0.83% after market hours of Thursday. Its market cap is at Rs 6,771.87 crore.

The year 2024 has been mostly bearish for Prince Pipes, giving more room for buy-on-dips opportunities. Since last month, there has been a significant upside in the stock.

In six months, the stock dipped by nearly 9% on BSE, but year-to-date, the stock is down by a huge 18.5%. However, in a month, the stock has shown some recovery and rose by 6.5%. But its most gains have come in the last 5 trading sessions to the tune of 9% upside.

The stock's 52-week high and low are at Rs 775.75 and Rs 521.55 apiece respectively.

Goldman Sachs has initiated a Buy on Prince Pipes for a target price of Rs 720 per share. The outlook is Positive.

However, the highest target price is set by JM Financial although still lower from the stock's 52-week high levels. But there is potential of 24.08% in Prince Piles going ahead. In its research report, JM's note said, "We recently met Prince Pipes' (Prince) management to get an update on the industry, its
underperformance in 9MFY24 vs. peers and its recent acquisition in the bathwater business. Demand for plastic pipes is strong for the industry, largely driven by plumbing and agriculture segments (seasonally strong in the Feb-June period), partly aided by range-bound PVC prices. Prince's underperformance in the last 4 quarters was mainly due to a) ERP transition-led disruption in 1QFY24 (resolved fully in 2QFY24) and b) over-premiumisation of its products (most of the corrections undertaken in 3QFY24 and early 4QFY24)."

Further, JM's note cited that the management maintains its guidance of sustainable operating margin around 12-14% in FY25/26 on the back of a stable PVC resin price environment and improvement in product mix (higher contribution of fittings and CPVC pipes), partly offset by losses in the bathwater segment.
Prince is ramping up its bathware portfolio rapidly, which is reflected in its recent acquisition of the Aquel brand.

Accordingly, JM's note said, "We trim our FY24-26 estimates to reflect investments in bathwater and arrive at Mar'25 TP of INR 760 (earlier INR 780) basis 30x Mar'26EPS. Notwithstanding recent quarters' underperformance, we continue to retain our faith in Prince as we believe it is well placed to ride on real estate recovery, product diversification, and brand building efforts to improve the enterprise business and distribution reach. We maintain BUY."

Astral:

Yet another plastic products maker, Astral gained over 2% to hit an intraday high of Rs 2,099.80 apiece on BSE, before ending at Rs 2,062.55 apiece up by 0.24% on the same exchange with a market cap of Rs 55,405.66 crore.

Astral's 52-week high and low is at Rs 2,143.50 and Rs 1,328.00 apiece. Unlike Prince Pipes, Astral has been performing well in 2024. YTD, the stock has gained by over 8%, while in six months, the upside is nearly 11%. In a year, Astral shares are up by 55% on BSE so far.

Goldman has initiated BUY on Astral for a target price of Rs 2,300 per share with the outlook being positive. There is potential for over 11.5% upside in Astral.

Astral stands for innovation and setting new trends in the piping industry. Bringing newer piping technologies and continuous innovation in existing as well as new products has been the focal point at Astral. This special emphasis helps the brand set the bar higher and lead amongst others by example.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.