Recovery in pipeline for pipe makers with price correction down the tubes

Margins to expand, given demand recovery in key segments and falling input costs

The stocks of plastic pipe makers could see multiple tailwinds, riding on the back of a fall in raw material prices, liquidation of high-cost inventory, and improving demand. In addition to an uptick in margins, lower prices are expected to give a fillip to volumes of two key segments critical to the sector’s growth — construction/housing and agriculture.

While other segments in the building material space were also impacted in the July-September quarter (second quarter, or Q2), the plastic pipe segment was perhaps the worst hit, reporting flat volumes on account of a correction in polyvinyl chloride (PVC) prices.

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