PVC Pipes Strong Quarter on the Cards
The demand for PVC pipes was healthy despite the higher prices during 2QFY22, after a lockdown seen in Apr'21 and May'21. The PVC pipes industry witnessed a higher realization supported by supply side shortage along with a continued increase in PVC prices. Pipes companies are likely to report strong numbers in 2QFY22 led by robust demand from both construction and agri segments. PVC resins prices have seen a sharp bounce-back in 2QFY22, with an average price of ~Rs130/kg, from ~Rs115/kg levels in 1QFY22. PVC pipes manufacturers also took a price hike of ~Rs10-12/kg during 2QFY22. Majority of players reported strong 50-60% YoY growth in Jul'21 driven by higher realisation. The demand for non-agri pipes remained intact in 2QFY22 led by the GoI's push for infrastructure spending along with strong revival of real estate sector. Western and southern regions continued to witness their strong demand for PVC pipes followed by northern region. With several small unorganized players, eastern region continues to remain underpenetrated. PVC pipes industry is also seeing market consolidation with smaller unorganized players facing supply side constraints due to the pandemic. A further correction in prices is expected to be gradual over a longer period of time, whereby realizations and margins will be lower in FY22 compared to the peak seen in 2HFY21. Rising market share from the unorganised players, market consolidation, higher PVC prices and a healthy capex augur well for the PVC pipes companies under our coverage universe.
Tags : ALLIED construction manufacturers Demand PVC Pipes Higher Prices Rising Market Share