Organised PVC pipe and fittings manufacturers are expected to post revenue growth of 10-15% this fiscal despite a 3-5% decline in sales volumes, as higher resin prices driven by elevated crude oil prices and a weaker rupee boost realisations. According to a report by CRISIL Ratings, the sector is likely to benefit from a sharp increase in product prices following the conflict in West Asia, even as demand moderates across some end-user segments. This marks a reversal from the previous two fiscals, when revenue growth remained largely flat despite higher sales volumes. The ratings agency expects volatility in global resin prices, escalation of the West Asia conflict and demand recovery across end-user segments to bear watching, while prices may normalise closer to pre-war levels in the coming months with the ceasefire announcement.
Higher crude prices and rupee depreciation are expected to keep PVC resin prices elevated this fiscal. As reported by CRISIL Ratings, two-thirds of resin requirements of PVC pipe makers are imported, accounting for 75-80% of their total costs. Rising resin prices — although expected to moderate in the third quarter — will drive realisations 12-15% higher on-year this fiscal. While prices may ease from current levels following the Iran-US ceasefire announcement, average resin and PVC product prices are expected to remain above pre-conflict levels during the fiscal year, supporting earnings growth. The rising prices of resins and PVC products will also support higher per-unit profitability, as fixed costs remain largely stable. According to Himank Sharma, Director at CRISIL Ratings, players are expected to pass on much of the cost increase to their customers, with EBITDA per tonne expected to rise to around ₹23,000 this fiscal from ₹21,200 in the previous year, representing growth of 8-10% and helping the sector regain profitability levels last seen in fiscal 2024 after two years of decline.
Demand from the irrigation segment, which contributes about 45% of total PVC pipe demand, is expected to grow 2-4% this fiscal. The growth will be supported by higher irrigation requirements for the 2026 agricultural season and the launch of Jal Jeevan Mission (JJM) 2.0 in March 2026 with an allocation of ₹67,670 crore, nearly three times that of the previous edition. However, demand from plumbing and water supply applications linked to urban infrastructure and real estate, which account for the remaining 55% of demand, is expected to remain under pressure due to elevated costs and inflationary conditions. As a result, overall PVC pipe sales volume is projected to decline by 3-5% this fiscal, deviating from steady growth seen in previous fiscals.
The increase in resin prices is expected to support profitability as fixed costs remain largely stable. According to CRISIL Ratings, EBITDA per tonne will rise to around ₹23,000 this fiscal from ₹21,200 in the previous year, representing growth of 8-10% and helping the sector regain profitability levels last seen in fiscal 2024 after two years of decline. The ratings agency expects organised PVC pipe manufacturers to add 5-10% to existing capacities this fiscal, involving capital expenditure of ₹2,500-2,700 crore and resulting in a 13-15% increase in gross block. Despite the planned capital expenditure and incremental working capital requirements, healthy cash accruals will limit reliance on external debt. As noted by Rushabh Borkar, Associate Director at CRISIL Ratings, capacity additions will also stay limited owing to expected moderation in sales volume, even as capacity utilisation holds steady around 70%. Higher resin prices are expected to increase inventory holdings, with inventory levels projected to rise by 10 days to about 85 days this fiscal from around 75 days as of March 31, 2026, driven by higher prices during the month of March 2026 after remaining at lower levels in the past two fiscals.
Higher resin prices are expected to increase inventory holdings, with inventory levels projected to rise by 10 days to about 85 days this fiscal from around 75 days as of March 31, 2026. This will lead to higher working capital requirements and greater dependence on short-term borrowings. According to CRISIL Ratings, higher resin prices have increased working capital requirements this fiscal, leading to higher dependence on external debt. The agency expects credit metrics to remain comfortable, with debt-to-EBITDA projected to stay below 0.25 times this fiscal while interest coverage is expected to remain above 33 times. Going forward, PVC pipe makers will maintain a healthy debt-to-EBITDA ratio below 0.25 time and an interest coverage ratio above 33 times this fiscal, compared with 0.3 time and 36 times, respectively, last fiscal.
