We anticipate a recovery in the plumbing demand in FY26, driven by the normalization of channel inventories and a resurgence in government spending. We believe that Morbi remains a structural challenge to the tiles industry, as its practice of volume dumping in the domestic market is expected to persist. Therefore, we are projecting a single-digit volume growth for both tiles' players in FY26 and FY27.
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The building materials sector experienced a soft demand in Q4 FY25. We project a 4% YoY revenue growth for our coverage universe, driven by volume growth. However, we estimate a 10% YoY decline in Ebitda and a 22% YoY decrease in adjusted profit after tax. This is attributed to heightened competition in the pipes segment, weak pricing in the tiles segment, and elevated timber prices impacting the wood segment.
We believe that the volume growth of major tile companies was negatively affected by weak export performance. Our pipes coverage universe is expected to report a subdued volume growth of 4% YoY. Amidst the intense competition and potential inventory losses, the margins of pipe companies are likely to be under pressure.
Wood companies will face challenges due to the sustained high timber prices. Looking ahead to FY26, we anticipate a healthy demand in both the pipes and wood panel segments. In the tiles segment, we predict that the unorganized Morbi will hamper industry leaders' growth.
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