Astral, Prince Pipes, Supreme, Finolex Industries - Structural, Sustainable, Scalable: Prabhudas Lilladher

Prabhudas Lilladher Report

Home building materials market (plastic pipes, tiles, wood panel, sanitaryware and faucets) is estimated to touch Rs 2.7 trillion by FY26 from Rs 1.3 trillion in FY22.

During CY13-20, the sector was impacted by real estate slowdown, goods and services tax implementation and demonetisation and Covid-19 pandemic over FY16-21, which resulted in single digit growth compound annual growth rate of ~6% during same period. The plastic pipe sector, however, has grown at 10% CAGR over FY13- 21.

Considering strong underlying demand along with healthy growth momentum, we initiate coverage on Astral Ltd., Finolex Industries Ltd., Prince Pipe and Fitting Ltd. and Supreme Industries Ltd. underpinned by-

1. healthy growth in real estate sector,

2. increased government spending on irrigation, water supply and sanitation and urban infrastructure;

3. benefits from industry consolidation; and

4. shift from unorganised to organised market, due to geographical expansions of large organised players.

We expect Astral/Finolex Industries/Prince Pipes/Supreme Industries to clock revenue/Ebitda/profit after tax compound annual growth rate of 14.6%/ 22.4%/ 31.2%, 7.7%/ 31.9%/ 25.6%, 10.2%/ 46.5%/ 65.9% and 11.2%/ 23.9%/ 21.5% respectively over FY23-25E.

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