Building Materials (Q4FY26 Results Preview): Strong Quarter: Inventory Build and Price Hikes

Secondary demand in the building materials sector remained largely steady in Q4FY26. However, channel restocking and recent price hikes are expected to support strong ~19% YoY revenue growth, translating into robust ~46–47% YoY growth in EBITDA and APAT. Coverage pipes companies are likely to report healthy ~27% YoY volume growth in Q4FY26, primarily driven by aggressive channel restocking amid a sharp increase in PVC resin prices. Looking ahead, FY27 volume growth is expected to remain muted, owing to a high base from Q4FY26, elevated PVC prices impacting agri‑pipe demand, and normalization of channel inventories. In the tiles segment, coverage companies are expected to deliver healthy 9–10% YoY revenue growth after a prolonged slowdown, supported by supply disruptions. However, these market share gains are likely to be short‑lived, as the resumption of Morbi production and continued volume dumping are expected to persist as a structural overhang for the industry. Demand in the wood panel segment remained broadly stable in the quarter. While timber prices were largely steady, a sharp increase in chemical costs led to industry‑wide price hikes. Century Plyboards continues to remain our top sector pick.

Tiles sector Morbi shutdown, organized players gain: Our coverage tile companies are expected to deliver healthy 9–10% YoY revenue growth after a prolonged slowdown, driven by gas‑related shutdowns of Morbi‑based players, which reduced competition and enabled market share gains for organized manufacturers. Tile prices have risen ~10% over the past month to offset higher gas costs. Kajaria and Somany are expected to report volume growth of 8% and 5%, respectively. Supported by cost‑rationalization initiatives, Kajaria’s EBITDA margin is projected to expand by 730bps YoY, while Somany’s is likely to witness a 110bps YoY margin improvement.

Plastic pipes sharp resin prices surge: End demand for plastic pipes remained broadly stable in Q4FY26, in line with previous quarters. However, resin prices rose sharply by ~65% in the quarter, prompting aggressive channel restocking. This steep increase in resin prices is also expected to drive inventory gains. Supreme Industries, Astral Pipes, and Prince Pipes are forecast to report YoY volume growth of 27%, 32%, and 18%, respectively.

Wood panel stable demand, rising chemical costs: Demand in the wood panel industry remained broadly stable. While timber prices were largely steady, a sharp increase in resin chemical costs led to industry‑wide price hikes. INR depreciation against the euro is likely to result in forex losses for Greenlam and Greenpanel, given their euro‑denominated borrowings. We expect double‑digit revenue growth for Century and Greenpanel, driven by market share gains, while Greenlam should report similar topline growth, aided by ramp‑up in new segments. In contrast, Stylam is expected to post a modest 2% YoY revenue growth due to export disruptions.

Outlook: We expect FY27 volume growth in the plastic pipes industry to remain subdued, reflecting a high base from Q4 channel restocking, elevated PVC prices impacting agri‑pipe demand, and potential resin price corrections as geopolitical tensions ease, leading to inventory normalization. In the tiles industry, organized players are witnessing near‑term market share gains due to higher finished‑goods inventories and the temporary shutdown of unorganized Morbi‑based manufacturers; however, this advantage is likely to be fleeting as Morbi production resumes and volume dumping continues as a structural overhang. Meanwhile, wood panel companies are expected to deliver healthy topline growth. Century Plyboards continues to remain our top sector pick.