HINDWARE HOME INNOVATION LIMITED
Know the Company
Hindware Home Innovation Limited (HHIL) is a leading company in the domestic building products sector, and it has also emerged as one of the fastest-growing company in the consumer appliances segment. The Company is into manufacturing, branding, distribution, and servicing of an array of product categories, including Tiles, Pipes, and Consumer Appliances, among others.
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HHIL, formerly known as Somany Home Innovation Limited, came into existence after the demerger of the marketing and distribution business of consumer products and retail divisions of the former Hindustan Sanitaryware and Industries Limited (HSIL) in 2017. This demerged division from HSIL was initially named as Somany Home Innovation Limited and later renamed to Hindware Home Innovation Limited. Additionally, the marketing and distribution of building products of HHIL were transferred to Brilloca Limited, a wholly owned subsidiary of the Company.
HHIL has mainly three business divisions: the Building Products Division, the Consumer Appliances business, and Retail. Building products contributing 80% of the revenue while consumer appliances contributed 18% and the rest of 2% came from retail business.
Consumer Appliances Business
HHIL has a selection of various household appliances such as kitchen appliances including chimneys, built-in hobs, dishwashers, cooktops, built-in ovens, cooking ranges, water purifiers, kitchen and furniture fittings, a range of water heaters, and sinks. The business also includes air coolers, pedestal and ceiling fans.
The Building Products Division: It is the flagship businesses of HHIL, comprising sanitaryware, faucets, plastic pipes & fittings, as well as premium and super-premium tiles. HHIL is one of the leading players in the country’s sanitaryware market and have strong brand, ‘Hindware’. It also positioned among the top two faucets players in the country. Under the ‘Truflo by Hindware’ brand, HHIL offers best-in-class, NSF-certified CPVC pipes for hot and cold-water plumbing applications, along with lead-free unplasticised polyvinyl chloride (UPVC) pipes, soil, waste, and rainwater pipes, as well as PVC pipes for potable water. It also provides overhead water storage tanks.
HHIL’s kitchen and furniture fittings brand, ‘FGV Powered by Hindware™, the range of products comprises MS slide‑on, integrated soft close, corner pie and wide-angle hinges, comfy ball bearing and excel bottom mounted drawer channels and uniplus and unilux drawer system, and aerolift liftups.
Retail : Under the retail business segment, HHIL offers specialty home interior products through franchise based retail stores, large format retail stores, and online platforms under the brand ‘EVOK’. It has a strong online presence and are also present on prominent multi-brand furniture marketplaces, such as Pepperfry, Urban Ladder, Flipkart, and Amazon. It has a strong presence via ccompay owned display sales stores and a strong and dedicated network of 30 franchise stores across the country, that helps it to reach out to more than 17,000 pin codes across India.
Subsidiaries
HHIL also has a strategic marketing tie-up with the leading Italian company, Formenti & Giovenzana, in the furniture and kitchen fittings segments. Hintastica Private Limited is a joint venture between Hindware Home Innovation Limited and Groupe Atlantic (France), overseeing the manufacturing, marketing, and distribution of water heaters and room heaters. Under Hintastica Private Limited, the company manufactures water heating solutions and electrical heating segment in India and the SAARC region.
Financials
HHIL achieved a consolidated revenue of Rs 693 crore, with a consolidated EBITDA of Rs 61.3 crore in Q3 FY24. Net profit for the period stood at Rs 4.53 crore as against Rs 7.8 crore in the same quarter of the previous FY. For the nine months ended December 2023, Company’s consolidated revenue reached Rs 2,027 crore, while consolidated EBITDA stood at Rs 210 crore.
Strengths
HHIL’s extensive range of products spanning various segments and price points, coupled with its robust distribution network and established brand recall positions the company as a leader in the market and maintain sustainable growth. Additionally, the Company offers a diverse range of IoT appliances, including smart water purifiers, water heaters, chimneys, and air coolers. In the fiscal year 2022-23, the company applied for four patents, bringing the total patent count to 32 since its inception.
Among the tiles segment, HHIL operates in the premium and super-premium categories, offering an aspirational range to discerning consumers. Its Plastic Pipes and fittings business, under the brand ‘Truflo by Hindware,’ is recognized as the fastest-growing brand in India within this sector.
Customer response to the Company’s new offerings continues to remain positive as reflected in the increasing share of new products, which contributed to 24% of its sales in the first nine months for FY24. HHIL aims to expand into high-growth segments while discontinuing loss-making divisions, which is expected to help the company maintain healthy profit margins.
The company intends to further penetrate new markets and tap into the untapped potential of Tier 3 and Tier 4 cities. It is actively expanding its distribution network to extend its reach. Concurrently, the company is investing in strengthening its presence in Tier 1 and Tier 2 cities by opening additional brand stores.
Apart from the recently introduced ‘Hindware Smart Appliances Universe,’ the brand boasts an extensive retail footprint nationwide, comprising 170+ Kitchen Galleries, 1300 distributors, 13000 retailers. HHIL’s market presence stands firm, with CPVC pipes and fittings contributing over 40% to its revenue. Presently, the company’s network encompasses over 300 active distributors and approximately 30,000 retailers spread across the country.
Among the pipe industries, there are around 11 categories of different products where industry leading companies are operating. HHIL are into four categories presently and it will be entering into three categories in year FY25, which will put HHIL into seven categories from next year.
HHIL’s Kitchen Appliance business remains resilient and continues to grow. Its chimneys continue their dominance on both the online platforms, Flipkart and Amazon. The Company is the number one on Flipkart and number three, steadily reducing the gap with number two, on Amazon.
Currently, HHIL is utilizing 78% of its capacity, also reaching around 85% in the latest quarter. The company is actively in the process of increasing its capacity as well as utilize optimal levels. Notably, HHIL’s capacity utilization levels are exceptional compared to the industry average of around 65%.
Expansion and Capex
HHIL is expanding its product portfolio by introducing high value-added items, beginning with foam core, particularly underground drainage, starting from Q1 FY25. The construction of HHIL’s new pipe manufacturing plant in Roorkee, Uttarakhand, is currently underway, with an anticipated operational launch in December of FY24-25, representing a significant milestone in its journey. Moreover, the company intends to manufacture double wall corrugated pipes and fittings, as well as fire sprinkler systems, expected to commence in Q3 FY25.
HHIL’s capital expenditure for the Uttarakhand plant has amounted to approximately Rs14 crores, till December, 2023. For the Hyderabad plant, the company also spent another Rs 34 crores. It’s not only linked to Hyderabad plant and the plant in the Roorkee, but the Company also plans to entail further smaller plants for the pipes in the west and in east, going forward, as pipe business is a freight sensitive industry. Next year, the Company plans to spend Rs 100 crores of investment in Uttarakhand as it expects to commercially operate this plant by end of December,2025, with a higher capacity of around 12,500 metric tons per annum. HHIL’s major capital capex is related to this pipe plant, which is being set up in Roorkee. In the last five years, the cumulative investments for the pipes industry were around Rs 340 crores.
Additionally, a significant portion of the capex is allocated towards establishing retail outlets in the market. Apart from expanding the pipe plant, the company plans to invest approximately Rs 60 crores to Rs 70 crores in expanding its Bathware business.
Outlook
Several factors are expected to contribute to the growth of kitchen appliances, pipes, and bathroom fittings in India. Rapid urbanization in India has led to increased demand for modern plumbing infrastructure in a big way. Additionally, the country’s growing middle class with rising disposable income levels have spurred demand for housing and commercial spaces, further driving the market. Moreover, a significant amount of replacement demand is also anticipated in the future.
In the December quarter, the consumer appliances business of the Company generated approximately Rs 150 crore in revenue. The company management aims to achieve a revenue of Rs 1,000 crore from its appliances business by FY2025.
HHIL is working on rationalizing its portfolio, including the possibility of exiting certain categories that have not been performing well. The company intends to further expand its kitchen area segment, possibly doubling down, as it has been performing well both online and offline. These initiatives are expected to lead to a positive EBITDA within a couple of quarters. This strategic move may temporarily impact growth, but in the long run, it is expected to yield fruitful results.
Going forward, HHIL’s focus will continue to be on innovation, expanding distribution channels, and enhancing operating efficiencies within the supply chain. Regarding the bathware business, which includes the sanitaryware and faucets segment, Company anticipates a growth of around 18-21 percent over the next 12-18 months. Additionally, its plastic pipes and fittings brand, Truflo, is currently one of the fastest-growing in the industry, expect a growth of around 20-25 percent in this segment. HHIL’s strategy for all its businesses includes the ongoing effort to build and strengthen its brands, expand market reach, improve operating and supply chain efficiencies, optimize working capital management, and enhance profit margins across its divisions.
Risk factors
Various risk factors are associated with the sanitaryware and pipes business in India, including intense competition, which can lead to pricing pressures and reduced market share. Shifting consumer preferences towards modern designs, energy-efficient products, and smart technologies are another risk factor as the Companies may require adapting their product offerings to meet evolving consumer demands.
Sector: Consumer Durables
Market Price: Rs. 394.50 as on today
FV: Rs 2/-
Stock Name: Hindware Home Innovation Ltd
BSE Code: 542905, NSE Code: HINDWAREAP
Market Cap.: Rs 2818 Cr
Book Value: Rs. 81.8
Segment: Sanitary Ware
Incorporation: 2017
Headquarters: Kolkata, India
