Sunil Singhania, Mukul Agrawal & other prominent investors are heavily invested in Hindware Home Innovation Ltd. BoB Caps has recommended buy for target price of Rs 600 (40% upside)

Hindware Home Innovation Ltd is a small-cap with a market capitalisation of Rs 3100 crore and a free float of Rs 1500 crore. Thw promoters hold 51.32% of the equity capital while the public holds 48.68%. A number of prominent PMS Funds, FIIs and HNI’s hold significant stake in the Company as shown below: Shareholder
Nos of shares % Mutual Funds/
30,78,060 4.26 LIC MF CHILDREN`S GIFT FUND 8,15,872 1.13 DSP SMALL CAP FUND 19,14,120 2.65 Alternate Investment Funds
39,13,047 5.41 ABAKKUS GROWTH FUND-2 10,12,607 1.40 ABAKKUS GROWTH FUND-1 21,86,234 3.02 Foreign Portfolio Investors Category I
40,12,606 5.55 INDIA INSIGHT VALUE FUND 7,98,000 1.10 MATTHEWS EMERGING MARKETS SMALL COMPANIES FUND 9,55,695 1.32 AL MEHWAR COMMERCIAL INVESTMENTS L.L.C. – (NOOSA) 15,52,479 2.15 Foreign Portfolio Investors Category II
14,73,935 2.04 COHESION MK BEST IDEAS SUB-TRUST 10,50,000 1.45 Resident Individuals holding nominal share capital in excess of Rs. 2 lakhs
56,89,693 7.87 MUKUL MAHAVIR AGRAWAL 8,00,000 1.11 GANESH SRINIVASAN 11,00,000 1.52 MANAV GUPTA 15,00,000 2.07 BOBCaps recommends buy of Hindware Home Innovation Ltd for target price of Rs 600 which is a 40% upside from the CMP The report reads as follows: Tough quarter but outlook healthy  EBITDA fell 35% short of our estimate due to tepid demand climate and steep margin compression across segments  Management guiding for sharp operating margin expansion from 8.6% in FY23 to 13-14% over the next two years  TP cut to Rs 600 (vs. Rs 700) on 13% reduction in our EPS estimates for FY25 and FY26; maintain BUY Weak Q3 : HINDWARE missed our estimates on all counts in Q3FY24, with revenue/EBITDA/adj. PAT coming in 11%/35%/79% below expectations, due to a tepid demand environment and sharp margin compression across segments. Revenue for the quarter fell 3% YoY, but EBITDA grew 2% off a low base. Poor performance across segments : HINDWARE reported better revenue growth (+5.6% YoY) compared to CRS (-3.1%) for the bathware segment in Q3. However, its bathware EBITDA margin fell sharply by 255bps QoQ to 13.6% owing to higher advertising spend. Plastic pipe volumes declined 3% YoY and segment EBITDA margin dropped 310bps QoQ to 7.7% following a steep decline in resin prices. Consumer appliance revenue declined 5% YoY and operating loss has risen sequentially as the company exited non-performing product categories. Margin guidance intact : Management believes demand conditions could remain challenging ahead of India’s general elections. The company expects consolidated revenue to grow 15-17% and EBITDA margin to improve sharply to 13-14% over the next two years. CRS retained guidance of expanding bathware EBITDA margin to 18% over two years, with plastic pipe volumes targeted to grow at more than 15% and the segmental margin improving to 10-12%. Management also expects the consumer segment to fare better over the next 2-3 quarters due to rationalisation of the product portfolio. The company plans to exit the loss-making retail business soon. Maintain BUY, TP cut 14% : We reduce FY24/FY25/FY26 EPS estimates for CRS by 36%/13%/13% to account for the disappointing quarter. Even so, we still expect the company to clock a robust EPS CAGR of 48.8% over FY23-FY26. This coupled with reasonable valuations leads us to maintain our BUY rating. The stock is trading at 26.5x on 1Y forward P/E vs. its historical average of 33.6x. We value CRS at an unchanged P/E multiple of 30x on Sep’25E EPS – close to its historical average – and have a revised TP of Rs 600 (Rs 700 earlier) following estimate changes. Click here to download Hindware Home Innovation -Q3FY24 Result Review 13Feb24 – BoBCaps Research