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ICICI Direct Report
Key raw materials such as polyvinyl chloride, high-density polyethylene, low density polyethylene pipe and vinyl acetate monomer prices have witnessed a contraction of 30-52% from their peak in March 2022 (12-21% from Q2 FY23 level).
We believe plastic piping companies are likely to benefit from easing raw material prices from their recent peaks and subsiding inventory losses, going forward.
We build in Ebitda margin recovery of 700 basis points for Supreme Industries Ltd. and 400 bps for astral in H2 FY23 over H1, respectively.
On the demand front, fresh inventory buildup at dealer’s levels amid strong agri and housing demand will drive volume growth for Supreme Industries and Astral Ltd. by ~19% and ~17% YoY, respectively, in H2 FY23.
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