Target: ₹503

CMP: ₹400.70

Hindware Home Innovation Ltd (HHIL) was demerged from AGI Greenpac Ltd (erstwhile HSIL Ltd) in August 2019.Hindware Home Innovation Limited (formerly known as Somany Home Innovation Limited) is a prominent player in the building products industry and a rapidly growing force in the Indian consumer appliances sector.

The company is dedicated to serving consumers and engages in manufacturing, branding, marketing, sales & distribution, and servicing across various product categories.The company is structured into three business verticals, each overseen by its own CEO or COO, and has established a framework of independent Strategic Business Units (SBUs).

We initiate coverage on Hindware Home Innovation with outperform rating led by focusing on expanding its bathware product range to capture more market share and increase profitability; Growing Plastic piping business by setting up the Greenfield plant at Roorkee with capacity of 12,500MT P.A; strengthening its balance sheet by lowering its debt burden; increasing its market size by venturing into new business segments.

We expect HHIL to registered a healthy revenue/EBIDTA/PAT growth of 7/20/40 per cent CAGR over FY23-26E and RoCE expansion from about 14.8 per cent in FY23 to around 18.9 per cent in FY26.

We ascribe a multiple of 23x on FY26E EPS to arrive at a TP of ₹503 with a rating of “Outperform”.