PRINCEPIPE

Poised for Recovery as PVC Cycle Turns

, India’s fifth-largest plastic pipe manufacturer, has seen its stock fall nearly 70% from all-time highs due to weak financial performance and volatile PVC pricing. However, recent developments—including China’s withdrawal of export rebates, rising crude oil prices, and improving domestic demand—suggest the cycle may be turning. With valuations at 9x FY27 EV/EBITDA, the company appears well-positioned for a recovery. Industry Context - 2025 challenges: Slower government spending, aggressive Chinese dumping, and weak domestic demand drove PVC price volatility. - PVC prices corrected ~18–20% in 2025, leading to dealer destocking and margin pressure. - 9MFY26 performance: - Volumes: +2% YoY despite weak demand. - Revenues: ₹1,748 crore (-3% YoY) due to lower realizations. - Margins: Soft, impacted by inventory losses. Positive Triggers - China policy shift: From 1 April 2026, China will eliminate the 13% VAT export rebate on PVC, reducing dumping and tightening global supply. - Crude oil rally: Prices surged from $65 to $90+ in two weeks amid West Asia tensions, lifting PVC and derivative prices. - Domestic manufacturers have hiked PVC prices 30–40% in March 2026, supporting realizations. - Channel inventories remain below normal, pointing to strong near-term demand. Outlook & Valuation - PVC pipe companies, beaten down during 2023–25, are expected to see margin normalization in H1CY26. - Prince Pipes is positioned to benefit from infrastructure and housing demand recovery. - Valuations: 9x FY27 EV/EBITDA, considered reasonable given cyclical recovery prospects. - Risks: Geopolitical volatility, crude price swings, and execution discipline in capturing demand revival. Conclusion With Chinese dumping set to ease and PVC realizations improving, Prince Pipes could see a turnaround in margins and investor sentiment. The stock remains underowned, offering accumulation opportunities for both near-term recovery and medium-term growth.