Building Materials – Healthy Revenues To Sustain; Margin Expansion Likely In H2: Systematix

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Of all segments within the building materials space, tiles and ceramics reported overall healthy Q1 FY23 (three-year revenue/Ebitda/profit after tax compound annual growth rate of 14%/17%/27%, respectively), with all leading companies in the segment recording revenue and margins higher than estimates.

The wood panel segment reported broadly in line performance, with a three-year revenue/Ebitda/profit after tax CAGR of 18%/25%/44%.

However, leading companies in the medium density fibre category presented a varied margin outlook. While Greenpanel Industries ltd. hinted at margins declining, Century Plyboards India Ltd. guided the same at elevated levels.

But, we expect both companies to report similar margins for the coming quarters. The PVC pipes segment surprised positively on revenues, driven by higher volumes and realisation, supported by a superior product mix; but, higher-than-expected inventory losses led to a large miss on the margin.

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