General Industrials share price target

Our building materials universe revenue to grow at a tepid pace for the fifth consecutive quarter on weak demand and lower realisations

Industrial companies are not a much talked about sector - but there are signs that it came out of the shadows in FY23.

We expect plastic pipe companies to witness volume pick-up from H2FY23E onward
due to significant correction in base raw material prices (PVC resin) by ~43% FY23-TD
(now closer to pre pandemic levels and 10-year average) resulting in increased demand from two of the major user-sectors: agriculture and plumbing.

For our capital goods coverage universe, we expect revenue growth momentum to continue in Q2FY23 for both EPC and product companies, led by robust order backlog and pickup in execution.

Leading pipe companies likely to report high inventory losses in Q2FY23 owing to freefall in PVC prices (trading below Rs 90/kg)

Plastic pipe companies in our coverage universe reported tepid volume environment (3- year CAGR in range of -7.7% to 4.9%) during Q1FY23 due to falling PVC prices, which resulted in some demand postponement and lower stocking by dealers.

Plastic Pipe Sector Review Q3FY21