Quarter 3 of the financial year, on the whole, was a dull one for building materials sector with some sectors like piping showing moderate growth while segments like tiles showing subdued performance. However, there was not much action on raw materials front too which helped the manufacturers to sustain without hiking the price.
In the third quarter too revenue of tiles players remained muted given subdued demand. Credit crunch and poor consumer sentiment have continued to impact volume growth and hindered price hikes in the sector. With realty sector still in slowdown phase, tiles manufacturers do not see any scope for recovery in the near future.
However, pipes sector has seen high single digit to low double-digit growth in the quarter which is reasonably good considering the economic condition prevailing in the country now. Industry growth was driven by stable demand from agriculture, infrastructure and plumbing. Also, the season saw a few regional players are losing market share. This and some leading players like Jain Irrigation facing NPA cases, may help some large pipe manufacturers to increase their market share in the market which ultimately may also give them pricing power in the coming days.
The demand for plywood and laminates remained challenging in the third quarter with 2-4% growth as demand revival remained weak. However, weakness in input cost, that is, mainly chemicals, helped the manufacturers to sustain business without increasing the prices.
According to the industry people, the fourth quarter too won’t be much different from the third quarter in terms of revenue growth. Most of the steps taken by the government like tax rate reduction may help to fetch better margin but may fail to ensure better demand. Further, the much-anticipated shift from unorganised to organised can play out only if demand/macro economy picks up. With sustained weakness in real estate amid recent NBFC crisis, credit crunch etc. fourth quarter may be a repetition of the third.