| Prince Pipes and Fittings Limited | ||||||
| Rating outlook revised to 'Negative'; Ratings Reaffirmed | ||||||
| Rating Action | ||||||
| ||||||
| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has revised its outlook on the long-term bank facilities of Prince Pipes and Fittings Limited (PPFL) to ‘Negative’ from ‘Stable’ while reaffirming the rating at ‘Crisil A+’. Short-term rating has been reaffirmed at ‘Crisil A1+’.
The rating action follows Crisil Ratings expectation that the weak pricing trends in polyvinyl chloride (PVC) resin, and sluggish demand from the end user sector, will continue to impact the business risk profile of the company over the medium term. The company has already witnessed a subdued revenue growth and weakened profitability in 9M FY25, with Q3 2025 witnessing significant headwinds.
During 9MFY25, PPFL faced margin erosion, with EBITDA margins falling below 6% where in, same was at 11.77% during similar period of FY24. This lowering of EBIDTA margins is primarily due to the lower pricing of products, resulting in inventory losses, while higher promotional expenses towards strengthening of brand also resulted in higher costs. Despite ongoing challenges, a gradual recovery in demand, supported by improving real estate activity and a pickup in infrastructure spending could be a monitorable for the revenues and operating margin improvement.
Working capital cycle has also elongated for the company during 9M FY 25, driven by slower inventory movement with inventory days increasing from 71 as on March 31, 2024 to 102 days as on Dec 31, 2024. Although PPFL maintains sufficient liquidity through available cash and cash equivalents like mutual funds and fixed deposits, even though lower profitability has constrained internal cash accruals. Cash and bank balance and mutual fund balances remained at Rs.16 cr and Rs.110 cr respectively as on Dec 31, 2024, though moderating from March 31, 2024 levels. PPFL’s capex in Bihar remains on track to enhance market penetration in the eastern region. It is expected to be commissioned in Q4FY25.
The ratings continue to reflect the established market position on back of strong business risk profile, strong financial risk profile and ample liquidity. These rating strengths are partially offset by susceptibility of profitability to fluctuations in raw material prices: and forex rates and exposure to intense competition. |
Analytical Approach Crisil Ratings has evaluated the standalone business and financial risk profiles of PPFL |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
|
Liquidity: Strong Liquidity is backed by large cash accruals, moderate long-term debt, moderate bank limit utilization, and a healthy cash & bank balance. The utilization in bank lines is 17% for 6 months ending December 2024. The cushion in bank lines will support the incremental working capital requirements. Unencumbered cash and bank balance and liquid investments were at Rs 110 crore as on Dec 31, 2024. Healthy cash accrual, financial flexibility and moderate capex should ensure strong liquidity over the medium term. |
Outlook: Negative PPFL’s credit profile will remain under pressure on account of subdued operating performance with reducing operating margins. |
Rating sensitivity factors Upward Factors
Downward Factors
|
About the Company Incorporated in 1987, PPFL is a Mumbai-based company and engaged in manufacturing of plastic pipes and fittings using four different polymers: UPVC, CPVC, PPR and HDPE. The company has a corporate office in Mumbai (Maharashtra). PPFL is promoted by Mr Jayant Shamji Chheda, his two sons Mr Parag Jayant Chheda and Mr Vipul Jayant Chheda, and by Mrs. Tarla Jayant Chheda and Mrs. Heena Parag Chheda. |
Key Financial Indicators
|
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Criteria Details
|