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Plastic pipe companies in our coverage universe reported tepid volume environment (three- year compound annual growth rate in range of down 7.7% to 4.9%) during Q1 FY23 due to falling PVC prices, which resulted in some demand postponement and lower stocking by dealers.
Pipe realisations however improved by 3.9-17% YoY due to better product mix as plumbing and soil, water and rain pipes contribution to sales was higher with the agri segment continuing to languish.
Ebit/kg during the quarter declined by 16.7-70.9% QoQ as the covered companies suffered inventory losses due to the continuous decline in PVC prices.
PVC prices continue to be under pressure and have declined by ~Rs 24/kg (~[down 20%] QoQ) in the ongoing Q2 FY23, which will result in inventory losses, hence subdued profitability, for pipe players.
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