Plastic pipe makers are set for a turnaround in Q2FY27 following a turbulent June quarter (Q1FY27). During Q1FY27, listed manufacturers suffered lower volumes driven by channel destocking, as falling import duties, greater availability of cheap Chinese polyvinyl chloride (PVC) resin, and sluggish demand weighed on PVC prices.
Aggregate volumes for plastic pipe companies tracked by PL Capital dropped around 16% year-on-year in Q1FY27. The agricultural pipes segment took a bigger hit than non-agricultural (plumbing) pipes. Despite March-June being peak season, demand for agricultural pipes remained muted as elevated fertilizer costs and high PVC prices hurt volumes.
Global PVC prices are also inching up. Channel re-stocking has improved since early July and domestic PVC resin prices have consistently increased from ₹78 per kg then to ₹94 per kg on 1 September, the PL report added. Increased shipping rates are also likely to make imports dearer.
Strong guidance
The improved visibility on PVC resin prices bodes well for channel re-stocking and volume recovery for listed companies. Astral has guided for double-digit pipe volume growth and more than 20% value growth in FY27, with Ebitda margin guidance at 16-18%. Supreme Industries eyes pipe volume growth of 15-17% and an Ebitda margin of 14%-14.5% this year. Prince Pipes and Fittings expects 12-15% volume growth and an Ebitda margin of 11-13%.
Margins remained resilient in Q1FY27 despite volume pressure. Pipe manufacturers covered by Nuvama Research benefited from a favourable product mix, driving year-on-year margin expansion across the board during the quarter.
Astral recorded a 40 basis point (bps) margin improvement to 18.3%, while Supreme Industries reached 14.6% (up 240 bps). Prince Pipes expanded its margin to 12.7% (up 580 bps), and Finolex Industries’ margin rose to 12.1% (up 310 bps). These stocks have delivered mixed returns over the past six months.
