Building Material - MDF Imports Continue To Decline; Tile Exports Soften But Still Healthy: ICICI Securities

ICICI Securities Report

Tile exports in June 2024 softened month-on-month but still remained healthy, while MDF imports continued on a declining trend YoY. Medium-density fiberboard imports volume fell 10.8% YoY to 19,506 tonne (plus 1.9% MoM), and in Q1 FY25, it declined 31% YoY. The decline in MDF imports is due to high ocean freight rates.

We see higher ocean freight rates as a likely near-term deterrent for MDF imports reaching their elevated levels seen in FY24.

Tile exports, in June 2024, grew ~13.6% YoY on a low base (-14% MoM), staying healthy at 41.4 MSM. For Q1 FY25, tile exports were flat YoY and stood at 136 MSM with GCC countries (~16%), U.S (~8%) and Russia (~6%) being the top export destinations.

The MoM slowdown seen in tile exports is due to high ocean freight rates. Tile industry participants highlight near-term exports may remain tepid due to higher freight rates; however, they expect growth to revive when freight rates normalise.

PVC resin imports grew healthy 69.3% YoY/-8.3% MoM and 28.9% YoY in Q1; laminate exports grew 14.9% YoY/4.1% MoM and +3% YoY in Q1. We prefer Kajaria Ceramics Ltd. in tiles segment and Greenpanel Industries Ltd. in woodpanel segment.

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