Building Materials Q3 Results Preview - Margin Expected To Improve, Healthy PAT: Prabhudas Lilladher

Prabhudas Lilladher Report

Building material companies under our coverage universe are expected to report moderate to strong volume growth even after higher base. We anticipate healthy volume growth ~12% YoY in plastic pipe sector, while tiles and bathware sectors are likely to experience lower growth of 5-7% YoY.

Further we also expect companies to register sales growth of 5.8% YoY, given correction in realisations in plastic pipe segment. With correction in raw material prices and fuel expenses, we expect margins to improve YoY (+190 basis points YoY) along with Ebitda/profit after tax growth of 21.1%/28.9% YoY.

We remain positive on the sector considering-

1. buoyancy in real estate market,

2. Government focus on housing, sanitation and infrastructure,

3. improvement in agri segment with normalisation in raw material prices,

4. pick-up in exports, and

5. increase in branded/large players market share.

We prefer woodpanel companies on account of-

1. stabilisation in timber prices,

2. possible reduction in MDF imports aided by implementation of BIS norms,

3. domestic MDF realisation maintained despite capacity increase and

4. healthy volume growth of 15-20% in MDF.

Our top pick is Greenpanel Industries Ltd. given revenue/Ebitda/profit after tax compound annual growth rate of 15.4%/26.1%/28.9% over FY24-26.

Considering buoyancy in real estate, tiles demand with lag in real estate cycle will benefit Kajaria Ceramics Ltd. (being leader in the sector).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.