After five-quarter choke, growth flows freer for PVC pipe makers

Resin prices level out and housing demand returns, unclogging earnings channels for industry majors

After five quarters of downcast performance, brokerages expect plastic pipe majors to recover in the second half of 2025-26 (FY26). Demand is improving, and polyvinyl chloride (PVC) prices have steadied. Along with these demand and raw material tailwinds, the proposed levy of anti-dumping duties could further aid domestic manufacturers. Although the April-June quarter (Q1) of FY26 was soft, brokerages see the sector’s outlook brightening.

 

Another possible catalyst could be a reduction in the goods and services tax, which currently stands at 18 per cent for pipe fittings. A lower tax rate, if introduced, would improve affordability for end-users, particularly in the housing and infrastructure segments, and give pipe makers additional room to expand volumes.

 

These drivers have already led to a rally in stock prices. Prince Pipes and Fittings gained 5 per cent, Finolex Industries rose 3 per cent, Astral Pipes advanced 2 per cent, and Supreme Industries added about 0.5 per cent. Analysts point out that the recent stock movement reflects investor optimism that the industry is entering a more favourable phase after a prolonged slump.

 

The immediate focus is on the likely anti-dumping duty. The Directorate General of Trade Remedies has issued its final finding on PVC resin imports from China, Indonesia, Japan, South Korea, Taiwan, and the US, paving the way for a duty that would narrow the pricing gap between imported and domestic resin.

 

India is structurally dependent on PVC imports, with domestic capacity at 1.8 million tonnes per annum (mtpa) against demand of 4.7 mtpa. This imbalance forces the industry to rely heavily on overseas suppliers, exposing it to swings in global prices. However, planned expansions adding 2.5 mtpa by calendar year 2027 from large conglomerates are expected to gradually reduce import dependence.

 

Pipe makers are likely to be the main beneficiaries of this supply shift. A stronger domestic supply base would not only cut reliance on imports but also enhance reliability, reduce raw material volatility, lower working capital requirements, and safeguard operating margins, according to Motilal Oswal Securities analysts led by Meet Jain.

 

Prabhudas Lilladher analysts Praveen Sahay and Rahul Shah also underline the importance of anti-dumping measures. They argue that the duties would restrict low-cost imports, support local producers, and help PVC resin prices stabilise — all of which would improve industry profitability. In their view, Astral, Finolex, and Supreme are best placed to gain from the likely move, as price stability would reduce inventory risks and allow them to expand market share over time.

 

The recent movement in PVC resin prices illustrates the point. In May, domestic resin prices rose by about ₹1.5 per kilogram after five straight months of decline. Between May and August, prices climbed another ₹4.6 per kilogram, signalling a reversal of the earlier downtrend. Stable to rising resin prices improve inventory valuations for manufacturers, which is why analysts see scope for short-term gains once volatility eases.

 

For Q1FY26, however, the industry’s financial performance remained under pressure. Revenue fell 3 per cent year-on-year as realisations dropped 8 per cent, even though volumes were up 3 per cent. Aggregate operating profit declined 27 per cent year-on-year, while operating profit per kilogram slipped 41 per cent due to steep inventory losses. Astral reported an inventory loss of ₹25 crore, while Supreme took a hit of nearly ₹50 crore. Analysts believe that if resin price swings reduce, companies could rebuild channel inventory, improving margins in the coming quarters.

 

Looking ahead, most companies expect demand to improve, supported by stronger government infrastructure spending, momentum in the housing sector, and a gradual recovery in rural markets. They reported a healthy pickup in volumes in July, with similar momentum continuing into August, suggesting that the sector has entered FY26 on a firmer footing.

 

Brokerages remain constructive on the leading players. Motilal Oswal Securities has a ‘buy’ call on Supreme, Astral, and Prince Pipes. For Prabhudas Lilladher, Astral remains the top pick in the sector. Analysts highlight Astral’s growth visibility, margin stability, and backward integration strategy, which together provide it with an edge over peers in both scale and resilience.