The ratings agency said the sector is likely to benefit from a sharp increase in product prices following the conflict in West Asia, even as demand moderates across some end-user segments. This marks a reversal from the previous two fiscals, when revenue growth remained largely flat despite higher sales volumes.
CRISIL’s analysis covers five leading PVC pipe makers with a cumulative revenue of around ₹20,000 crore, accounting for nearly 60% of the organised market’s revenue in the last fiscal.
Higher realisations to offset weaker demand
According to CRISIL, higher crude prices and rupee depreciation are expected to keep PVC resin prices elevated this fiscal.
“Higher crude prices and a depreciating rupee are expected to keep resin prices elevated. As two-thirds of resin requirements of PVC pipe makers are imported, accounting for 75-80% of their total costs, rising resin prices — although expected to moderate in the third quarter — will drive realisations 12-15% higher on-year this fiscal,” Himank Sharma, the director of CRISIL Ratings, said.
Demand from the irrigation segment, which contributes about 45% of total PVC pipe demand, is expected to grow 2-4% this fiscal. The growth will be supported by higher irrigation requirements for the 2026 agricultural season and the launch of Jal Jeevan Mission (JJM) 2.0 in March 2026 with an allocation of ₹67,670 crore, nearly three times that of the previous edition.
However, demand from plumbing and water supply applications linked to urban infrastructure and real estate, which account for the remaining 55% of demand, is expected to remain under pressure due to elevated costs and inflationary conditions. As a result, overall PVC pipe sales volumes are projected to decline by 3-5% this fiscal.
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Profitability set to improve
The increase in resin prices is also expected to support profitability as fixed costs remain largely stable.
CRISIL estimates the earnings before interest, taxes, depreciation and amortisation (EBITDA) per tonne will rise to around ₹23,000 this fiscal from ₹21,200 in the previous year, representing growth of 8-10% and helping the sector regain profitability levels last seen in fiscal 2024 after two years of decline.
While prices may ease from current levels following the Iran-US ceasefire announcement, average resin and PVC product prices are expected to remain above pre-conflict levels during the fiscal year, supporting earnings growth.
Capex, inventory build-up to raise working capital needs
The ratings agency expects organised PVC pipe manufacturers to add 5-10% to existing capacities this fiscal, involving capital expenditure of ₹2,500-2,700 crore and resulting in a 13-15% increase in gross block.
At the same time, higher resin prices are expected to increase inventory holdings. Inventory levels, which stood at around 75 days as of March 31, 2026, are projected to rise by another 10 days to about 85 days this fiscal, leading to higher working capital requirements and greater dependence on short-term borrowings.
“Despite the planned capital expenditure and incremental working capital requirements, healthy cash accruals will limit reliance on external debt,” Rushabh Borkar, Associate Director, CRISIL Ratings, said.
CRISIL expects credit metrics to remain comfortable, with debt-to-EBITDA projected to stay below 0.25 times this fiscal, while interest coverage is expected to remain above 33 times.
How listed PVC pipe makers fared in Q4
The March quarter saw a mixed performance from listed PVC pipe manufacturers.
Supreme Industries reported a stronger-than-expected quarter, with net profit rising 47.5% to ₹433.6 crore from last year, while EBITDA grew nearly 50% to ₹623 crore. Its revenue increased 16.5% to ₹3,527.6 crore, though it came in marginally below Street estimates. Its EBITDA margin expanded 400 basis points to 17.7% from the year-ago period. However, the company reported 11.8% volume growth in its plastics pipes business for FY26, below its guidance of 15-17%.
Astral reported a 19.7% rise in net profit to ₹213 crore from the previous year and revenue increasing 24.3% to ₹2,089 crore. However, both figures missed Street expectations. EBITDA rose 27% to ₹383 crore, while EBITDA margin improved marginally to 18.3% from 18% a year earlier.
Finolex Industries reported a weaker quarter, with revenue declining 5% year-on-year to ₹1,171.8 crore. EBITDA fell 18% to ₹171.3 crore, while EBITDA margin contracted to 14.6% from 16.9% in the year-ago period.
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