Motilal Oswal sector of the week: Pipes; Astral, Supreme Ind among top bets

The robust demand from the housing, irrigation, and infrastructure sectors is expected to support the robust expansion of the Indian plastic pipes market. The market is anticipated to expand at a 14 per cent compound annual growth rate (CAGR) from ₹541 billion in FY24 to ₹805 billion by FY27, driven by significant government initiatives and ongoing replacement demand.

 

By expanding their capacity and strategically diversifying their business, organised players, who now control over 70 per cent of the market (up from 50 per cent in FY10), are propelling growth. Leading companies like Prince Pipes, Astral, and Supreme Industries are aggressively entering related markets like industrial components, water tanks, and bathware. With a projected compound annual growth rate (CAGR) of 8–12 per cent, these high-growth categories have the potential to increase the total addressable market (TAM) to 3.6 times the size of the core pipes industry.

 

 

With major manufacturers moving toward value-added products like CPVC, HDPE, and OPVC pipes, margins could improve. Major businesses' aggregate Ebitda margins are expected to rise from around 13.5 per cent in FY25 to about 16 per cent by FY28, driven by rising demand for high-end goods and stable raw material prices.

 

Replacement demand, particularly the move from GI to CPVC/PVC pipes, has maintained a strong growth engine despite previous slowdowns in the real estate market. Between FY20 and FY24, industry revenues increased 1.8 times faster than the rise of residential launches.

 

Strong tailwinds are still provided by policy support. The need for pipes in irrigation, sanitation, and water delivery is increasing as a result of flagship projects like Jal Jeevan Mission, AMRUT, PMAY, and PMKSY. About 40 per cent of pipe demand is due to irrigation alone, as 52 per cent of farmed land is still unirrigated, offering significant headroom. 

 

Additionally, new demand pools for HDPE, MDPE, and OPVC pipes are being created by modern applications in infrastructure, smart cities, and city gas distribution.

 

The Indian plastic pipes industry is well-positioned for consistent growth in volumes, sales, and profitability through FY28 because to solid fundamentals, growing TAM, and encouraging policy momentum.

Astral – Target price: ₹1,800

Astral has solidified its position as a pioneer in India's plastic pipe industry, revolutionising the sector with CPVC pipes in 1998 and expanding into five key segments — Pipes, Water Tanks, Adhesives & Sealants, Bathware, and Paints. With the highest TAM of ₹1,595b in the industry, ASTRA’s strategic acquisitions, capacity expansions, and strong exports drive sustained doubledigit growth. Its revenue/Ebitda/Adjusted PAT is estimated to clock a CAGR of 16/17/23 per cent over FY25-FY28, driven by volume growth (12 per cent CAGR).

Supreme Industries – Target price: ₹5,400

Supreme Industries is a key player in India's plastic industry, leveraging decades of expertise to build a robust product portfolio across pipes & fittings, bathware, industrial goods, consumer products, and advanced packaging solutions. Operating 25 state-of-the-art plants with a robust 1,091,000 MTPA capacity. Its revenue/Ebitda/ Adjusted PAT is estimated to report a robust CAGR of 14/20/23 per cent over FY25-FY28, driven by healthy volume growth (at 13 per cent CAGR) and improving margin profile.