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Volume Growth and Margin Expansion Expected

For Q3FY26, we expect marginal YoY volume growth across segments in the Building Materials space, with operating margin likely to improve, supported by higher volumes. Pipe volume is projected to grow ~2% YoY, driven by demand from real estate, infrastructure and home improvement. EBITDA/kg for our coverage universe is expected to decline ~10% YoY, reflecting a higher contribution from lower-margin products and a decline in PVC prices. The bathware segment is expected to deliver ~20% YoY revenue growth, while tile volumes are projected to grow ~6% YoY. In the wood panels segment, plywood and MDF volumes are estimated to grow ~12.0/13.6% YoY, respectively, with segment margin expected to expand ~69 bps, aided by plywood price hikes and an improved product mix.

Overall, the Building Materials sector is expected to witness marginal volume growth trends, led by bathware and wood panels, followed by the Pipes and Tiles segments. Overall, profitability is expected to improve, backed by higher volumes and a better order book.

The market would pardon any disappointment on the volume growth front in this quarter if management commentary indicates a sharp recovery in H1CY26.

Sector View

We maintain our positive stance on the Building Materials sector. Volume growth, better product mix and a strong order book will be the key catalysts, going forward.

High-conviction investment ideas:

We maintain a positive stance on HINDWARE and MAN, which are expected to deliver strong growth in Q3FY26E

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