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Capturing new opportunities!

Initiate coverage on SI/ASTRA/PRINCPIP with a BUY rating

* Core industry growth to accelerate at ~14% CAGR: The Indian plastic pipes industry has evolved significantly, registering a ~10% CAGR over the last decade to reach ~INR541b in FY24. This growth is anticipated to accelerate to ~14% CAGR over FY24-27, reaching ~INR805b by FY27, driven by strong demand from housing, irrigation, water supply, and sanitation. Additionally, robust replacement demand will be a key growth driver.

* Seizing emerging opportunities and expanding TAM: Leading players within the sector have diversified beyond pipes into adjacent high-growth categories such as water tanks (TAM INR100b in FY24), bathware (INR194b), and industrial components, leveraging innovation and market expansion. Each of these categories is set to register a healthy CAGR averaging ~12% over the next few years.

* Replacement demand a saving grace amid the construction slowdown: CPVC/PVC pipes have steadily replaced GI pipes, sustaining demand despite a 38% decline in residential real estate launches (CY12-20). Industry revenue grew 1.8x from FY20 to FY24, outpacing real estate launch growth of 1.75x. Pipes contribute just ~2-3% of total building costs, but once installed, they are critical and expensive to replace.

* Organized players to gain further share: Organized players currently hold ~70% of industry demand, up from 50% in FY10. A few key players dominate ~40% of the market: SI (~11%), Ashirvad (9%), FNXP (8%), ASTRA (7%), and PRINCPIP (5%). The extended Anti-Dumping Duty (ADD) on CPVC (until Jun’29) and potential ADD on PVC resins will accelerate the shift towards organized players. Sector consolidation is expected to gain momentum, benefiting organized firms with strong balance sheets. * Public sector projects amplify pipeline demand: The Indian government has initiated several projects and schemes that benefit the plastic pipes sector, particularly in areas like water supply, sanitation, agriculture, and infrastructure development,such as Jal Jeevan Mission (JJM), where the government has achieved ~81% rural household (HH) tap water connection, and the remaining 19% (~37m HHs) is likely by CY28. Other key government initiatives driving demand include AMRUT, PMAY, Namami Gange, and Bharatmala.

* Irrigation demand – a sustainable growth driver for PVC companies: Irrigation accounts for ~40% of overall pipe demand (mainly PVC), but only 52% of India’s cultivated land is irrigated, presenting a major growth opportunity. Key government schemes towards irrigation, such as PMKSY, have experienced a 25% jump in budget allocation over 2025-26 to INR83b.

* New-age applications to drive PVC demand: The growing adoption of HDPE, MDPE, and PEX pipes in city gas distribution supports the government’s goal of 70% gas coverage by 2030, offering 25-30% cost savings over metal pipes. Meanwhile, Oriented PVC (OPVC) pipes are replacing Ductile Iron (DI) pipes in water supply and sewage projects, driven by government initiatives like AMRUT, Smart Cities, and sustainability programs, enhancing infrastructure and energy efficiency. All the key players are in the process of setting up OPVC capacities to cater to the demand.

* Our initiating coverage universe: We initiate coverage on: 1) Supreme Industries (SI), 2) Astral (ASTRA), and 3) Prince Pipes and Fittings (PRINCPIP) with a BUY rating. These companies are some of the key players operating in the Indian plastic pipes space. We believe that these companies are well-positioned to gain further market share and deliver a healthy earnings trajectory.

* Key risks: 1) fluctuation in polymer prices, 2) stagnation in real estate demand, 3) threat from competition, and 4) dilution of brand name.

Growing demand with TAM expansion

Leading players have diversified beyond pipes into adjacent high-growth categories like water tanks, bathware, and industrial components, expanding their Total Addressable Market (TAM). ASTRA (TAM: INR1,595b), SI (INR975b), PRINCPIP (INR 835b), FNXP (INR541b), and APOLP (INR835b) have ventured into new product segments to enhance cross-selling opportunities and expand the market beyond pipes. With adjacent categories such as bathware and water tanks projected to report 8%/12% CAGR, diversification will be the key to sustained industry expansion and improving profitability.

Sectoral tailwinds to support growth

The Indian plastic pipes industry clocked a ~10% CAGR over FY14-24, reaching INR541b, driven by plumbing and irrigation, which accounted for 84% of total applications. CPVC, HDPE, UPVC, and PPR pipes reported strong growth, with PVC maintaining the largest market share. The industry is set to accelerate at 14% CAGR to reach INR805b by FY27, supported by real estate expansion, irrigation needs, and long-term government initiatives such as JJM, Housing for All, and Smart City Mission. Organized players dominate 70% of the market, with major firms such as SI (11%), Ashirvad (9%), FNXP (8%), ASTRA (7%), and PRINCPIP (5%). The extension of ADD on CPVC imports and the anticipated ADD on PVC resins will further drive market consolidation, benefiting organized players.

Replacement demand and infrastructure push driving pipe industry growth

Despite a 38% decline in residential launches during CY12-20, PVC and CPVC pipe sales have remained strong (growing 46% in FY20 over FY12), driven by replacement demand from aging GI pipes. With pipes accounting for only ~2-3% of total building costs, their high durability and cost-effectiveness have accelerated adoption. During real estate revivals, pipe companies have consistently outperformed, with sales growing 1.8x in FY24 over FY20. Additionally, public infrastructure projects such as JJM (INR670b allocation), irrigation schemes (PMKSY), and smart city developments continue to fuel demand. Around 52% of India’s cultivated land lacks irrigation, presenting a major growth opportunity for PVC pipes. With a strong replacement cycle and rising government investments, the pipe industry remains well-positioned for sustained growth.

New-age pipes fueling growth across key sectors

The rapid adoption of new-age plastic pipes is transforming CGD, water supply, and infrastructure in India. With the government targeting 70% CGD coverage by 2030 and aiming to increase the gas mix from 6.7% to 15%, HDPE, MDPE, and PEX pipes are gaining traction due to their cost efficiency, flexibility, and corrosion resistance. Beyond CGD, advanced polymer-based pipes are reshaping plumbing, irrigation, and industrial applications. CPVC pipes are driving hot and cold water distribution, OPVC pipes are replacing Ductile Iron (DI) pipes in sewage and water projects, while HDPE pipes are playing a crucial role in micro-irrigation and smart city development. These innovations are expanding market potential and driving long-term industry growth.

Scaling new heights!

Our Pipes coverage universe includes SI, ASTRA, and PRINCPIP, which hold very unique positions individually. However, on an aggregate basis too, the combined revenue growth of these three companies (~14%) outpaced the industry growth of ~11% over FY19-24. The combined revenue in FY25 was INR188b (up 2% YoY) and is poised to register a 14% CAGR over FY25-28E, aided by strong industry tailwinds and TAM expansion. The combined EBITDA margin has been volatile over the last five years, with 14% in FY19 improving to ~15.1% in FY24 and declining to ~13.5% in FY25. We anticipate the margin to improve to ~16% level by FY28, aided by raw material price stabilization and an improvement in the demand scenario. Consequently, this will lead to an EBITDA CAGR of ~20% to reach INR44.4b over FY25-28 from INR25.4b in FY25. The combined net profit margin was ~8% in FY25, and it is projected to improve to 11% by FY28. The combined net profit is likely to post ~25% CAGR over FY25-28 to reach ~INR29.7b by FY28 vs. INR15.3b in FY25.

Initiating coverage on SI, ASTRA, and PRINCPIP with a BUY rating

SI, ASTRA, and PRINCPIP are some of the key players operating in the Indian plastic piping space. We believe these companies are well-positioned to gain further market share and deliver healthy earnings. We initiate coverage on SI, ASTRA, and PRINCPIP.

* SI: The company 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/ Adj. PAT is estimated to report a robust CAGR of 14%/20%/23% over FY25-FY28, driven by healthy volume growth (at 13% CAGR) and improving margin profile. We initiate coverage on the stock with a BUY rating and a TP of INR5,400 (premised on 45x FY27E P/E, which reflects a 22% premium over the stock’s five-year average one-year forward P/E).

* ASTRA: The company has solidified its position as a pioneer in India's plastic pipe industry, revolutionizing 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 INR1,595b in the industry, ASTRA’s strategic acquisitions, capacity expansions, and strong exports drive sustained doubledigit growth. Its revenue/EBITDA/Adj. PAT is estimated to clock a CAGR of 16%/ 17%/23% over FY25-FY28, driven by volume growth (12% CAGR). We initiate coverage on the stock with a BUY rating and a SOTP based TP of INR1,800 (premised on 60x FY27E P/E, which implies a 10% discount over the stock’s five-year average one-year forward P/E).

* PRINCPIP: It is among India’s top five plastic piping providers and operates seven plants (398K MTPA by FY25) with 7,200+ SKUs and a 1,500+ distributor network. With ~25% of revenue from CPVC and ~70% from real estate, PRINCPIP is set to benefit from India's growing real estate sector. Further, strategic expansion in East India, premium product launches, and government infrastructure projects further drive growth. Its revenue/EBITDA/Adj. PAT would report a robust CAGR of 15%/38%/73% over FY25-FY28E due to a low base, driven by 12% volume CAGR. PRINCPIP is currently trading at 22x FY27 EPS, which is an attractive valuation given the growth trajectory. We initiate coverage on the stock with a BUY rating and a TP of INR500 (premised on 32x FY27E P/E).

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