Prince Pipes Rally Faces Test At ₹395; SEBI Analyst Cautions On Valuation Stretch

Prince Pipes & Fittings surged nearly 9% on Thursday after domestic brokerage firm Motilal Oswal initiated coverage with a “Buy” rating and set a target price of ₹500, citing robust growth prospects.

Motilal Oswal expects a 15% revenue CAGR, 38% EBITDA CAGR, and 73% PAT CAGR between FY25–28, driving heavy buying in the stock.

Overall, brokerage sentiment remains mixed. While Motilal Oswal highlighted strong demand from housing, infrastructure, and water management sectors, ICICI Direct maintained a more cautious stance on margin recovery. Analysts on TradingView are also divided, with some optimistic on further upside momentum, while others flagged overvaluation concerns.

Technical Analysis

According to SEBI-registered A&Y Market Research, the stock’s valuation remains a key talking point. It trades at a forward PE of ~22x, which is considered fair, but the trailing PE of 155x reflects stretched pricing. This suggests the rally could attract profit booking once the initial momentum fades.

Technically, the stock was initially in a downtrend marked by lower highs and lower lows, A&Y Market Research noted. However, after forming a lower high, it failed to create a new lower low and instead established a higher low, signaling a potential reversal.

The analysts see key resistance at ₹395, and a decisive breakout above this level could confirm a trend reversal. However, if the stock fails to cross the level, it could retest lower supports.

Weak Q1 Earnings

The brokerage upgrade comes despite the company posting a 4% drop in Q1 revenue from operations and a staggering 80% slump in profit after tax. Profit margins slid from 4% to 1% in Q1. However, sales volume for Q1 grew by 4% to 43,735 MT.

The company aims to capitalize on the growing domestic pipes industry, which Crisil projects will expand at a 10 - 12% CAGR through 2030.

Retail Cheer

On Stocktwits, retail sentiment turned ‘bullish’ on the update. It was ‘neutral’ yesterday.

Prince Pipes & Fittings stock was trading at ₹343.80 minutes before market close.

Investors are hoping for a turnaround in the stock, which has already declined 20% year-to-date