India’s plastic pipes industry is showing signs of recovery after a volatile FY26, with Motilal Oswal Financial Services turning positive on the sector and naming Astral Ltd and Supreme Industries Ltd as its preferred picks.
The brokerage believes improving demand conditions, channel restocking and long-term supply-demand dynamics in PVC could support a stronger growth cycle in FY27 and beyond.
Sector recovery gathered pace in Q4 FY26
The turnaround became visible in the final quarter of FY26.
PVC resin prices surged nearly 64% year-on-year during March 2026, driven by global supply disruptions and geopolitical tensions in West Asia.
The sharp rise prompted distributors to rebuild inventories after several quarters of low stocking.
Organised players benefited from:
- Higher volumes
- Inventory gains
- Better operating leverage
- Improved product mix
Near-term challenges remain
Motilal Oswal cautioned that the correction in PVC prices following the temporary removal of import duties could create pressure in the first quarter of FY27.
Potential headwinds include:
- Inventory losses
- Lower realizations
- Margin pressure
Despite that, the brokerage remains constructive on the broader outlook.
Infrastructure demand expected to improve
Demand from the plumbing segment continues to remain resilient because of its link to residential construction and renovation.
The brokerage expects infrastructure spending to support growth across:
- Water supply projects
- Sewage treatment
- Gas distribution networks
- Urban development
Industry consolidation is accelerating
The recent volatility has widened the gap between organised and smaller regional players.
According to Motilal Oswal, smaller manufacturers continue to face:
- Raw material price fluctuations
- Working capital constraints
- Balance-sheet stress
Meanwhile, larger companies have strengthened their position through:
- Established brands
- Wider distribution networks
- Better supply-chain capabilities
Shift toward value-added products
The industry is also witnessing a gradual move toward premium products.
Segments growing faster than traditional pipes include:
- CPVC pipes
- Industrial piping
- Gas distribution solutions
- Drainage systems
Manufacturers are also investing in:
- Capacity expansion
- Decentralised manufacturing
- Branding
- Backward integration
The brokerage noted that India’s PVC demand is expected to remain well above domestic supply, creating long-term opportunities for the industry.
Astral remains a preferred pick
Target price: ₹1,950
Motilal Oswal expects Astral Ltd to benefit from its diversified building materials portfolio and growing presence in adjacent categories.
The company has businesses across:
- Plumbing pipes
- Adhesives
- Paints
- Bathware
- Construction chemicals
Q4 FY26 performance
Plumbing volumes rose 24% year-on-year.
Plumbing EBIT margin expanded by 280 basis points to 19.1%, helped by operating leverage and a richer product mix.
However, profitability in the adhesives business came under pressure because of higher raw material costs and branding expenses related to the Bondtite campaign.
Growth outlook
Motilal Oswal expects:
- Revenue CAGR of 18% between FY26 and FY28
- EBITDA CAGR of 25%
- PAT CAGR of 37%
Key growth drivers include:
- Volume growth in plumbing
- CPVC backward integration
- Expansion of distribution channels
- Scaling up paints, bathware and construction chemicals
The brokerage also expects margins to improve with higher utilisation levels and benefits from CPVC resin integration.
Supreme Industries also among top bets
Target price: ₹4,320
Motilal Oswal said Supreme Industries Ltd remains well positioned to benefit from recovering PVC demand and stable pricing.
The company continues to hold a leadership position in the plastic piping segment and is expanding into higher-growth categories.
Growth drivers
- Capacity additions
- Planned capital expenditure
- Expansion in CPVC products
- Industrial fittings business
Q4 FY26 performance
Revenue increased 17% year-on-year to ₹3,530 crore.
EBITDA rose 50% to ₹620 crore, while EBITDA margin expanded by 390 basis points to 17.7%.
Net profit climbed 48% to ₹430 crore.
The piping segment recorded volume growth of 18%.
Earnings outlook
Motilal Oswal expects earnings to maintain strong momentum, projecting 16-23% CAGR across key financial metrics during FY26-FY28.
Key takeaway
Motilal Oswal believes the plastic pipes sector is entering a healthier phase after navigating FY26 volatility.
With infrastructure spending improving and demand remaining stronger than domestic PVC supply, organised players are expected to continue gaining market share.
Among its preferred stocks, the brokerage sees Astral and Supreme Industries as the key beneficiaries of the sector’s long-term growth.
TL;DR
Motilal Oswal has named plastic pipes as its sector of the week and recommended Astral and Supreme Industries. The brokerage expects improving demand, industry consolidation and rising infrastructure spending to support growth in the coming years.
AI Summary
- Motilal Oswal has turned positive on the plastic pipes sector.
- PVC demand in India is expected to outpace domestic supply.
- Astral has a target price of ₹1,950.
- Supreme Industries carries a target price of ₹4,320.
- Infrastructure spending and premium products are expected to drive growth.
