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PVC pipes sector set for rebound as key triggers align

After a challenging FY25 and a subdued start to FY26, the domestic pipes sector appears to be at the cusp of recovery. With DGTR’s recommendation on implementing Anti-Dumping Duty (ADD) and PVC prices stabilizing at bottom levels, a gradual price uptick is expected. Coupled with an improving demand environment, these factors are set to drive a gradual rebound from 2QFY26 onwards.

* Despite a weak 1QFY26, companies remain confident of delivering double-digit volume growth for the year, backed by a strong recovery in Jul-Aug’25, stable PVC prices, expected ADD-led support, and an improving demand outlook.

* DGTR has recommended ADD on key exporters from seven countries, including China and the US, which account for a large share of India’s imports. With domestic PVC capacity at 1.8mMT vs demand of ~4.7mMT, India remains structurally deficit; however, planned expansions of ~2.5mMT by CY27 from major conglomerates are set to gradually substitute imports. Pipe manufacturers will be key beneficiaries, as this shift will enhance supply reliability, reduce raw material volatility, lower working capital requirements, and safeguard margins.

* The PVC pipes sector posted a 3% YoY revenue decline to INR58.7b in 1QFY26, driven by 8% lower realizations despite 3% volume growth. Aggregate EBITDA fell 27% YoY to INR6.6b, blended EBIT/kg dropped 41% YoY to INR9, with heavy inventory losses (SI: INR500-600m, ASTRA: INR350m, PRINCPIP: INR150-200m). Management of our coverage companies expects this to be the last quarter of such losses.

* We expect the PVC pipes industry to see a gradual recovery from 2QFY26 (on a low base), with a further pickup in momentum from 2HFY26. Hence, we reiterate our BUY rating on SI (TP: INR5,350), ASTRA (TP: 1,650), and PRINCPIP (TP: INR440).

Outlook turns positive with an improving demand scenario and stabilizing PVC prices

* 1QFY26 remained difficult, weighed down by weak macro conditions, muted demand, and fluctuations in raw material prices. However, management commentary indicates that growth momentum is likely to return from 2QFY26.

* PVC resin prices appear to have bottomed out (at ~USD700/MT), and their expected stability should enhance distributor confidence, limit inventory-related setbacks, and support a progressive margin recovery.

* Industry outlook signals a gradual recovery, with companies anticipating demand improvement aided by stronger government infrastructure initiatives and momentum in the housing sector. Most companies reported a healthy pickup in volumes in Jul’25, with similar momentum observed in Aug’25. This indicates a healthy end to FY26.

* Hence, all our coverage companies have retained their FY26 guidance despite a weak performance in 1QFY26.

* With PVC prices having bottomed out, emerging positives such as the favorable DGTR order on Anti-Dumping Duty (ADD) for PVC Suspension Resins (PVC-S) are expected to support price recovery. This, in turn, should encourage channel restocking, as current inventory levels remain low.

* The DGTR has issued its final findings on the investigation into the dumping of PVCS in India. It concluded that dumping has adversely impacted the domestic industry and has recommended the imposition of ADD for five years on select exporters from seven countries – China PR, Indonesia, Japan, Korea, Taiwan, Thailand, and the US.

* Notably, the government had already imposed provisional duties in Nov’24 following the preliminary findings. In the final notification, the duty rates have been revised slightly compared to the provisional levels (refer to Exhibit 1 for detailed rates).

ADD and domestic capacity additions to improve supply chain and margins

* India’s demand for PVC resin witnessed a 6.2% CAGR over FY20-25, reaching ~4.7MMT in FY25. Of this, major supply came in from imports (CAGR ~28% over FY22-25), while domestic production has remained stagnant at ~1.5mMT for the last few years. Out of India’s total demand for PVC, ~95% pertains to Suspension PVC resin (used in pipes and fittings), and the balance ~5% pertains to Paste PVC resin.

* According to Care ratings, India’s PVC demand is expected to post ~8% CAGR over FY25-27, reaching ~5.5mMT, with major contribution expected from domestic producers. India anticipates a huge capacity addition over the next two to three years, i.e. ~2.5mMT by CY27. Of this, two major conglomerates, Reliance Industries (~1.2MTPA in CY26) and Adani group (~1MTPA by CY28), are contributing the most.

* With the recent findings of DGTR on implementing ADD on PVC-S and capacity expansion plans, this will significantly reduce imports. According to CARE, imports are expected to almost halve to ~1.4mMT in FY27 vs ~3mMT in FY25.

* Domestic PVC-S availability will structurally improve supply reliability, reduce raw-material volatility, lower working capital needs, and protect margins. Non-integrated pipe companies (ASTRA, SI, PRINCPIP, APOLP) are likely to be the biggest beneficiaries, while integrated players (FNXP, RIL-affiliated pipe makers) will gain more from industry stability and downstream demand expansion.

Weak demand environment and volatile pricing hurt operating performance

* For the pipes sector discussion, we have included key pipe companies such as SI, ASTRA, and PRINCPIP from our coverage, along with FNXP and APOLP.

* The PVC pipes sector’s 1QFY26 revenue declined 3% YoY to INR58.7b due to an 8% YoY drop in realizations and muted demand (3% YoY pipes volume growth). SI led with 6% YoY volume growth, PRINCPIP/FNXP grew 4%/2%, while ASTRA remained flat. APOLP reported a decline of 5%.

* Revenue declined the most for APOLP (-11% YoY), followed by FNXP (9%), PRINCPIP (-4% YoY), ASTRA (-2%), and SI (-1%). For our coverage universe, we expect an aggregate revenue growth of ~11% in FY26 (implying 15% YoY growth in 9MFY26) and a CAGR of 14% over FY25-28.

* EBITDA for the pipes sector fell 27% YoY to INR6.6b (down 32% QoQ due to seasonality). FNXP saw the steepest EBITDA decline (-55% YoY), followed by PRINCPIP (-32%), APOLP (-29%), SI (-18%), and ASTRA (-14%).

* Blended EBIT/kg dropped 41% YoY to INR9, with PRINCPIP seeing the sharpest decline (-74% YoY to INR2). Our coverage blended EBIT/kg declined 37% YoY to INR11.

* Heavy inventory losses from PVC volatility – SI: INR500–600m, ASTRA: INR350m, and PRINCPIP: INR150–200m. FNXP reported no inventory losses, supported by effective inventory management, while APOLP has not indicated any inventory losses in 1Q. Management of our coverage companies expects this to be the last quarter of such losses as PVC prices stabilize, with margins projected to expand going forward.

Key commentary from companies

* SI has guided for a strong demand recovery from 2QFY26 onwards, supported by channel restocking as inventories normalize by Sep’25. For FY26, the company expects total volume growth of 14-15%, led by plastic piping systems at a higher 15-17%, with EBITDA margin in the 14.5–15.5% range and effective capacity utilization improving to 65-70% by year-end. Capex outlay is projected at ~INR13.5b in FY26, including INR3.1b for the Wavin acquisition, with the remainder directed toward capacity additions across verticals to drive product diversification. The company targets expanding plastic piping capacity to 1MMTPA by Mar’26 and is setting up a 5KMT window profile line in Kanpur. Outlook is expected to turn positive, with industry growth pegged at 9-10%, supported by rural demand recovery and steady momentum in urban housing, infrastructure, and real estate. Supply-side volatility has eased with PVC prices stabilizing, though risks persist from delayed government payments and the outcome of ADD on PVC imports (this risk has been neutralized by the government’s final finding on imports).

* ASTRA: Astral reported flat volumes in 1QFY26 due to weak demand, early monsoon, lower government spending, and an inventory loss of INR350m. However, from Jul’25, volumes improved sharply (+30% YoY), and management expects lower double-digit volume growth for FY26, with potential upside if ADD/BIS measures spur channel restocking. For the piping business, the EBITDA margin is guided at 16-18%. To strengthen integration, Astral is acquiring 80% in Nexelon Chem to set up a 40,000 MT CPVC resin plant (INR1.5b capex) by 2QFY27 using in-house technology, making it the lowest-cost capacity in the industry for captive use, thereby boosting CPVC pipe margins (25-30%), freeing working capital, and supporting market share gains. The adhesives business remains on track, with India guiding for 15-16% revenue growth and 14-16% margins, while the UK business is undergoing a turnaround supported by the addition ofsenior leadership. Paints are expected to deliver INR2.4b revenue in FY26, marking a 20% growth.

* PRINCPIP has guided for a demand recovery from 2QFY26, supported by strong volumes in Jul’25, with margins expected to improve sequentially and reach ~12% by 4Q. The bathware segment is projected to generate INR500-600m in revenue, with break-even targeted by mid-FY27. On capex, PRINCPIP incurred INR750m in 1Q and plans to invest INR1.6-1.7b over the next nine months, focused on capacity addition at Begusarai (Bihar), expansion in bathware (Aquel), and maintenance. The Begusarai plant, with a total capacity of 60KTPA, is expected to ramp up utilization from 2HFY26 and be fully operational by Sep’25. On the branding front, PRINCPIP has partnered with Indian Railways to showcase its brand across Vande Bharat and other premium trains, significantly boosting visibility and customer engagement, while also strengthening its distribution network and expanding the product portfolio.

* APOLP: CPVC currently contributes ~15% of volumes, with management expecting this share to rise above 20% within 1-2 years. In Jul’25, the company entered a comarketing agreement with a leading CPVC resin supplier—already approved by major real estate developers and projects. Early signs point to high double-digit CPVC sales growth post-agreement. Installed capacity is targeted to reach 286,000 TPA over the next two years (vs. ~230,000 TPA currently). For FY26, management guides for double-digit volume growth (low-to-mid double digit, with potential upside if demand strengthens in 2Q). In the near term, 2Q is expected to improve vs 1Q, as monsoons recede and construction activity resumes. Government infrastructure spending remains a key swing factor, with management optimistic about a pick-up in 2HFY26.

* FNXP: The quarter was impacted by the early onset of monsoon from late May, with subdued demand in June. However, management highlighted a recovery in July with high single-digit volume growth despite ongoing rains. The company expects at least high single-digit and potentially double-digit volume growth for FY26. Inventory was managed effectively, avoiding significant losses in 1Q, though channel inventory remained low as stocking typically follows anticipated price hikes. Management expects channel restocking to pick up post-monsoon, especially if ADD is imposed (which is a possibility now), which could trigger a domestic price increase of INR3-6/kg and temporarily boost stocking. Meanwhile, BIS implementation has been deferred to December.

Valuation and view

* Though 1QFY26 was weighed down by weak macros, muted demand, and inventory losses from PVC volatility, we expect the PVC pipes industry to see a gradual recovery from 2QFY26 (on a low base), with a further pickup in momentum from 2HFY26. This will be supported by improving PVC prices (with the implementation of ADD), leading to channel restocking, a pickup in government infrastructure push, and improving housing demand.

* Additionally, companies across the sector are signaling a healthy recovery in volumes from Jul-Aug’25 and retaining their FY26 guidance with double-digit volume growth.

* We reiterate our BUY rating on SI (TP: INR5,350), ASTRA (TP: 1,650), and PRINCPIP (TP: INR440).

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