Barring the agriculture segment (largest end-user segment), demand from other segments like plumbing and infrastructure has been weak.
Jefferies, in a recent report, indicated that agri-pipes were witnessing good pre-monsoon traction and operating at a high utilisation rate. This was despite demand for construction pipes being weak — caused by projects in urban and tier-1 centres being delayed by the lockdown extension and migrant labour issue.
Analysts expect a pick-up in most segments, following the monsoon. Though near-term volumes — barring the agri pocket — are expected to be weak, larger players will likely gain market share.
Close to 40 per cent of the plastic pipes segment is accounted for by unorganised players, which may lose out due to cash flow issues, funding constraints, and regional presence.
Most analysts expect the consolidation trend to gather pace, given the severe liquidity issues in the unorganised segment.
While the near-term outlook remains weak, analysts at JM Financial believe the long-term growth story remains intact, given the shift from metal to plastic pipes, value-added products, as well as varied end-user requirements.