Indian Hume Pipe Company Limited
Know the Company
Indian Hume Pipe Company Ltd (IHPCL), part of the Walchand Harichand group, was incorporated in 1926 and is headquartered in Pune. The company manufactures a diverse range of products, including Hume Pipes, Hume Steel Pipes, Pre-stressed Concrete Pipes, Bar Wrapped Steel Cylinder Pipes, Steel Penstock Pipes, RCC Poles, Septic Tanks, RCC Lampposts, and Manhole covers. RCC Hume Pipes are used for applications such as sewerage, drainage, culverts, irrigation, water supply and transportation. Additionally, the company produces pre-stressed concrete, steel, reinforced cement concrete pipes, and penstock pipes for hydroelectric power projects and cooling water pipelines for thermal power plants.
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IHPCL’s products are widely used in various infrastructure segments across the nation, including Water Supply, Irrigation, Drainage, Power Generation, and Rail Transport. The company also undertakes numerous turnkey projects for Water Supply, Sewerage, and Hydroelectric Power Generation, and supplies Concrete Sleepers for the modernization of railway tracks in India.
Today, the company has a wide network of over 19 manufacturing facilities and 19 sales offices spread across India and is currently executing over 100 projects. IHPCL has also executed projects in neighbouring countries such as Nepal, Sri Lanka, Burma, Malaysia, and Iraq. The company is certified with ISO 9001:2015, ISO 14001:2015, and OHSAS 18001:2007.
Strengths
Indian Hume Pipe Company is a pioneer in the field of water supply pipe manufacturing, with over five decades of industry experience. Over time, the company has developed a range of products, including Pre-Stressed Concrete Pipes (Non-Cylinder), Prestressed Concrete Cylinder Pipes, Bar Wrapped Steel Cylinder Pipes, Hume Steel Pipes, Welded Steel Penstocks, and Pre-stressed Concrete Railway Sleepers. The company also specializes in the execution of turnkey water supply and sewerage projects (EPC contracts) as well as it operates in urban and rural water supply, large-diameter irrigation pipelines, head works including pumping machinery, treatment plants, overhead tanks, and other allied civil construction projects.
IHPCL’s expertise encompasses designing custom-made pipes and delivering comprehensive engineering packages for pipeline projects. The company has earned a reputation for excellence through its use of modern technology, stringent quality control measures, timely execution, and ongoing research and development. As a result, IHPCL’s products have gained recognition and acceptance in highly competitive markets.
The company is actively introducing innovative products. It introduced Bar Wrapped Steel Cylinder (BWSC) and Prestressed Concrete Cylinder Pipes (PCCP), as alternatives to M.S. and D.I. pipes. Both BWSC and PCCP have gained popularity among various government authorities. To meet the growing demand for these pipes, the company has established dedicated manufacturing plants in Choutuppal (Telangana), Chilamathur (Andhra Pradesh), Dhule, and Walwa (Maharashtra). Additionally, the company has expanded its existing facilities at Rajkot, Kanhan, Patancheru, Yelhanka, Thanjavur, Kekri, Sikar, Karari, and Kovvur to manufacture these pipes for addressing local demands.
The company is concentrating on emerging opportunities in real-estate related activities. With 19 manufacturing facilities and surplus land available for development at most of its plants, the company has already begun monetizing some of these surplus lands. It is optimistic that this strategy will contribute to achieving a debt-free status within the next 5 years.
Land Development Status
Two phases of Residential real estate project named “Dosti Greenscape” by Dosti Realty Ltd have been launched on revenue share basis on the Company’s land at Hadapsar, Pune. The revenue generated from the sale of the project will be shared in the ratio of 38% to the Company and 62% to M/s. Dosti Realty Ltd. As on May, 2024, 334 flats having Sale value of Rs 247 crores have been booked out of which the share of the Company is Rs 93.84 crores.
The Company also has executed Development Agreement with M/s. Birla Estates Pvt. Ltd on July, 2023 for about 6.8 acres land at Badarpur, New Delhi to develop residential project on revenue share basis. It is likely to yield a development potential of about 13 lakhs sq. ft of saleable area. The revenue generated from the sale of the project will be shared in the ratio of 36.5% to the Company and 63.5% to Birla Estates Pvt. Ltd.
The Company executed Development Agreement with M/s. Kalpataru Ltd on May, 2023 for 14.74 acres land parcel at Vadgaon Pune to develop a residential project on revenue share basis. It is likely to yield a development potential of about 18 lakhs sq. ft of saleable area. The revenue generated from the sale of the project will be shared in the ratio of 32.5% to the Company and 67.5% to Kalpataru Ltd.
Orders Flow
IHPCL secured several orders recently, including a Rs 495 crore contract from the Tapi Irrigation Development Corporation in Maharashtra for the Jalgaon Irrigation Project Circle. This contract covers EPC (Engineering, Procurement, and Construction) of civil, mechanical, and electrical works. In March, the company received six letters of acceptance worth Rs 242 crore from the Bangalore Water Supply and Sewerage Board. Additionally, a joint venture between IHPCL, AMR India Limited, and Shoda Constructions Private Limited was awarded a work order worth Rs 1,138 crore from the Public Health and Municipal Engineering Department of the Telangana government. Of this total order, Indian Hume Pipe will execute 20%, amounting to Rs 278 crore.
IHPCL currently has an order book position of approximately Rs 4,300 crore, which is more than 3.5 times its revenue for FY2024. These orders are expected to be executed over an average period of 24 to 30 months, providing clear revenue visibility in the near term. The order book spans 12 states across India, including Odisha, Andhra Pradesh, Karnataka, Madhya Pradesh, Rajasthan, Uttar Pradesh, and Maharashtra.
Financials
IHPCL’s consolidated net profit surged to Rs 44 crore in Q4 FY24, compared to Rs 16 crore in Q4 FY23. However, revenue from operations declined by 11% to Rs 404 crore in Q4 FY24, down from Rs 454 crore in Q4 FY23. Profit before tax stood at Rs 58 crore, representing a 192% year-on-year increase. Additionally, EBITDA rose by 78% during the quarter. For the financial year ended March 2024, the company reported revenue of Rs 1389 crore, a decline from Rs 1543 crore in FY2023. During the same period, net profit increased to Rs 103 crore, up from Rs 72 crore in the previous year.
Risk Factors
Availability of substitutes such as alternative pipe materials like Ductile Iron pipes, spirally welded steel pipes and H.D.P. E. pipes are perceived as the major threat to the Company. To increase the competition, PVC and HDPE pipes prices dropped significantly in the past one year.
IHPCL’s key raw materials include steel, steel wires, HT wires, and cement. Among these, the prices of all materials except cement have been on an upward trend over the past couple of quarters, which is a cause for concern for the company.
The company’s prospects largely depend on projects supported by the central and various state governments and their agencies. As such, budget allocations and government priorities can significantly impact infrastructure projects, potentially affecting both orders and payments.
Fundraising
In May 2023, the company issued 42,34,600 equity shares with a face value of Rs 2/- each at an issue price of Rs 141.69 per share (including a premium of Rs 139.69 per share). This issuance, conducted on a preferential basis to the promoters and members of the promoter group, raised Rs 60 crore. The company primarily utilized these funds to reduce debt and finance expansions.
Outlook
The Central Government’s Jal Jeevan Mission scheme has been successful, providing substantial order flow for the company as crores of rural households receive tap connections. There is significant potential for additional water supply projects under this scheme in various states, including Uttar Pradesh, Jharkhand, and Rajasthan. Driven by government initiatives and rising demand, the Indian water sector has witnessed several successful Public-Private Partnerships and Engineering Procurement Construction projects over the last decade. This trend demonstrates that India offers a favorable investment ecosystem in this domain, providing a great opportunity for companies that offer innovative technologies and solutions to address the country’s impending water situation.
An increase in population and urbanization inevitably leads to greater demands for water supply connectivity and sewage facilities. As more people move to urban areas, the need for reliable water infrastructure grows to meet the rising demand for clean drinking water, sanitation, and industrial use. Additionally, with increased urban density, efficient sewage systems become crucial to manage waste and prevent public health issues. These factors drive the need for expanded and upgraded water supply and sewage facilities, prompting investments in related infrastructure projects. In addition to this, various infrastructure projects including Airport and railway stations as well as smart city projects also gives immense opportunity for the Company’s products and services, going forward.
Sector: Industrials
Market Price: Rs. 491.75 as on today
FV: Rs 2/
Stock Name: Indian Hume Pipe Company Ltd
BSE Code: 504741, NSE Code: INDIANHUME
Market Cap.: Rs 2440 Cr
Book Value: Rs. 157
Segment: Pre-cast Pipes & fittings
Incorporation: 1926
Headquarters: Pune
