Whalesbook
Elara Capital forecasts a mixed demand environment for India's building materials sector through the December quarter (Q3FY26). Analysts anticipate that overall demand will remain soft, despite select companies achieving notable volume growth and market share gains. Performance is expected to diverge significantly across different segments due to company-specific strategies and category dynamics.
Sector Outlook Mixed for Q3
Analyst Amit Purohit noted that despite broader demand headwinds, certain players could still achieve double-digit volume growth. Within Elara's coverage universe, Astral Limited and Century Plyboards (India) Limited are projected to report strong performance, driven by market share expansion.
Wood Panels Show Strength, Tiles and Paints Lag
Demand conditions remain challenging for the tiles segment, burdened by muted domestic activity and weak export performance. Geopolitical tensions and elevated tariffs in the U.S. are expected to impact tile exports, contributing to subdued results. In contrast, wood panels are demonstrating resilience, bolstered by steady demand for Medium-Density Fibreboard (MDF) and market share gains in plywood.
The paints sector continues to face pressure from weak consumer demand and high competitive intensity. Aggressive pricing strategies and substantial trade incentives offered by competitors are limiting growth prospects for established players, making double-digit value growth unlikely. Elara Capital maintains a cautious stance on paints, citing persistent demand recovery issues and sustained competition.
Margin Stability Expected Amidst Divergent Performance
Ebitda margins for the building materials coverage universe are expected to remain broadly stable, with an estimated year-on-year rise of approximately 25 basis points. Margin improvements in wood panels and plastic pipes are anticipated to offset the weakness observed in the tiles segment. While tile Ebitda margins are projected to improve significantly by 185 basis points year-on-year, wood panels are expected to see a 149 basis point increase. Paint margins, however, may experience a slight decline of about 12 basis points year-on-year.
The earlier non-implementation of anti-dumping duties had impacted PVC prices for Astral, but prices have since risen by ₹1 per kg effective January 2026, which is expected to support performance in Q4FY26. For paints, Asian Paints and Berger Paints India Limited are forecast to report modest sales growth of 4.6% and 2.7%, respectively, in Q3FY26E, as they navigate increased aggression from competitors like Birla Opus.