New Delhi, July 23 India's polyvinyl chloride (PVC) pipes and fittings manufacturing sector will see a growth of 10-11 per cent in revenue this fiscal (FY26), led by robust demand from end-user segments and a more stable price environment, a report said on Wednesday.
Manufacturers will see a recovery this fiscal after witnessing a flattish revenue growth in the last financial year, Crisil Ratings said in its latest report.
The uptick in demand is driven by positive momentum in government schemes such as Jal Jeevan Mission, PM Awas Yojna and other construction activities.
“Demand for PVC pipes and fittings has remained robust in recent times, driven by government schemes such as Jal Jeevan Mission and Pradhan Mantri Awas Yojna, which focus on the water supply, sanitation and housing segments,” said Himank Sharma, Director, Crisil Ratings.
The growth will lead to a reduction in manufacturers' high-cost inventory as dealers begin restocking channels and partly wipe out a 130 basis points’ decline in operating margin last fiscal.
Improved profitability and easing inventory levels will also reduce manufacturers' working capital requirements and afford room to expand capacities without stressing balance sheets, the report highlighted.
According to the report, 16 PVC pipe makers, with cumulative revenues of over Rs 30,000 crore, representing two-thirds of the organised segment’s revenues in the last fiscal, indicated the growth potential this fiscal.
Typically, manufacturers sell to dealers, who, in turn, sell to end-user industries such as irrigation, water supply, sanitation and plumbing, and urban infrastructure and real estate — for greenfield as well as replacement requirements.
"Demand from irrigation and water supply projects, contributing close to three-fourths of the sectoral revenues, is seen remaining strong, given the government’s push in these sectors," the report stated.
Replacement and new demand from the real estate sector will also contribute, though moderately as compared with the past few fiscals, as fresh project launches are expected to reduce.
This fiscal, the volume is seen growing faster, riding on demand and stable prices with the provisional ADD keeping resin prices rangebound, the report said.
Higher volume should help the revenues of manufacturers grow 10-11 per cent and crank up operating rates, leading to a rebound in operating margin to 13.5-14 per cent this fiscal.
“Additionally, better demand will also lead to restocking by dealers and reduce the inventory at manufacturers by 8-10 days, curbing debt addition," said Rushabh Borkar, Associate Director, Crisil Ratings.
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