A country’s progress passes through its pipelines, i.e., water infrastructure, which is the lifeline of any developing economy. And India is no different. Despite this, according to Water.org, 35 million people in India do not have access to clean water. Given this urgency, the government has increased its focus on water access and allocated ₹670 billion under the Jal Jeevan Mission in the 2025-26 budget.
This renewed push is expected to benefit the plastic piping stocks. The piping industry is set to grow at 14% annually, with the PVC pipe market expected to expand at 6% by 2030. The biggest beneficiary of this growth is likely to be market leader Supreme Industries, which holds an 11% share, followed by Astral Pipes.
Let’s take a look..
#1 Supreme Industries
Established in 1942, Supreme is a leading plastics processor. It has a strong brand recall and market position in every segment it operates in. It is supported by a vast distribution network of over 6,000 distributors.
It has 29 plants across India with a total installed capacity of 9.5 lakh metric tonnes, which is expected to increase to 10.73 lakh metric tonnes by March 2025.
The company operates under four business verticals: Plastic Piping Division, Consumer Products, Packaging products, and Industrial products.
The plastic Piping division leads, contributing 69% of its total revenue of ₹100 billion in FY24, followed by Packaging Products, which contributes 14%. The remaining 13% comes from Industrial Products, and 4% from Consumer Products.
Catering to a diverse end-user profile reduces the risk of a slowdown in any segment or industry. Furthermore, revenues are supported by a growing contribution from value-added products, which accounted for around 40% of total revenue during FY24, with operating margins exceeding 17%.
The company’s standalone revenue has grown at a compound annual growth rate (CAGR) of 13% over the past five years, reaching ₹101 billion in FY24, a 10% increase from the previous year.
The revenue growth has been driven by a stable 10% CAGR in sales tonnage across the company and a 17% CAGR in revenue from the plastic piping segment.
Robust revenue growth has enabled cost efficiencies, allowing the Supreme to offer competitive pricing while maintaining superior margins. Its margins improved from 13.5% in FY19 to 16.3% in FY24, with FY21 standing as an outlier at 20.6%.
Backed by improving margins, Supreme’s net profit has outpaced its revenue growth during this period. Net profit has grown at a 23% CAGR to ₹10.2 billion in FY24, which marks a 33% increase over the previous year.
Additionally, it has demonstrated efficient capital allocation with an industry-leading 5-year average return on capital employed (RoCE) of 32% and return on equity (RoE) of 26%. The company has remained debt-free since 2021, with a cash surplus of ₹2.9 billion as of Q3FY25.
The company’s performance in the 9MFY25 showed weakness. Its revenue grew just 4% to ₹74.2 billion, due to slower volume growth of 7.8%. Its margin fell 1.15 percentage points to 13.7%, due to volatility in PVC prices.
However, Supreme’s net profit fell 9.5% to ₹6.4 billion, primarily due to a 21% year-on-year increase in depreciation. Lower infrastructure spending and extended monsoons, which led to a destocking of products, affected the company. In fact, this has posed a challenge to the entire piping industry.
Looking ahead, the company expects overall sales to grow by 14-15% this fiscal year, driven by increased demand from end-users. While government initiatives have boosted demand from the agriculture sector, the increased use of plastic products in households and growth in the real estate sector are expected to drive volume growth.
To this end, it plans to invest in regular capital expenditures at its existing 29 plants, as well as add new locations going forward. The total capital expenditure (capex) in FY25 was ₹15 billion, funded entirely through internal accruals.
It has a total installed capacity of about 9.5 lakh MT, which is expected to increase to 10.73 lakh MT by FY25 end. Moreover, Supreme has started commercial production from new greenfield plants in Assam, Tamil Nadu and Odisha, which is expected to aid revenue growth.
The company also plans to diversify its product portfolio within the existing product lines. Apart from this, the company is also looking to expand its distribution network at existing locations and gain market share in untapped areas.
The company remains exposed to volatility in raw material prices, such as polyvinyl chloride, high-density polyethene, and polypropylene, which can lead to inventory losses and margin moderation.
Supreme Industries trades at a price-to-equity multiple of 45x, a 22% premium to the 10-year median of 37x.
Supreme Share Price
#2 Astral Pipes
Founded in 1996, Astral manufactures PVC and CPVC-based plumbing systems and plastic pipes. It pioneered CPVC piping in India, marking its entry as a key player in the category.
Astral has an annual manufacturing capacity of 3.3 lakh metric tonnes of pipes and water tanks (as of FY24). Besides plastic pipes, Astral also operates in the adhesives, paints, taps, and sanitary ware businesses.
The plumbing business leads, accounting for 73% (or ₹41 billion) of its total revenue of ₹56 billion. Segment revenue has grown at a 20% CAGR over the last four years to ₹41 billion in FY24, a 10% increase from FY23. This growth was led by a 67% rise in sales volume, supported by 40% capacity additions, over the same period.
Backed by strong revenue growth and optimal capacity utilisation, its margin has consistently remained above 17%. As a result, its profit before tax has grown at a 26% CAGR to ₹6.0 billion over the past four years.
Now, turning to its paints and adhesives business, which contributes the remaining 27% of revenue. The paints segment has grown at a 26% CAGR over the past four years, reaching ₹15 billion in FY24, a 7.8% increase from FY23. Profit before tax in this segment has grown at an 18% CAGR to ₹1.3 billion, supported by consistent margins that remain above 14%.
On a consolidated basis, Astral’s revenue has grown at a 22% CAGR over the last four years, ending FY24, to reach ₹56 billion. The strong growth in the plumbing business, its key revenue driver, supported revenue growth. On the other hand, its net profit has grown at 22% CAGR to ₹5.5 billion in FY24, supported by a strong EBITDA margin.
The company remains net-debt free, with a net cash balance of ₹5 billion in FY24. In 9MFY25, Astral revenue grew just 3% to ₹41.5 billion, while net profit declined 6% to ₹3.4 billion. Lower infrastructure spending and weaker monsoons affected the company.
Looking ahead, the company plans to leverage its cash on hand to grow both organically and inorganically. Two additional new pipe manufacturing facilities are planned in Kanpur and Hyderabad. These are expected to commence operations in two phases by the end of FY26. With this, the management intends to increase its market share and accelerate growth over the next five years.
The company has been tasked with doubling the revenue of its existing standalone pipe business over 5 years. In the adhesive industry, it is also aiming to double its revenue within the next five years, driven by both existing products and new launches. Its strong distributor network, with a pan-India presence, will likely play a crucial role.
The company aims to achieve revenue growth of 15-20% in the paint business over the next few years, driven by a strategic focus on quality and innovation. Astral plans to expand its product offerings and strengthen its distribution network to capture market share.
Astral also acquired a ready facility based on an asset purchase to manufacture taps in Jamnagar, Gujarat. These new business segments have synergy with Astral’s existing business segments. Astral plans to leverage its vast and deep pan-India distribution network to drive growth in the new businesses.
Astral trades at a P/E of 67x, 8% discount to a 10-year median of 72x.
Astral Share Price
Conclusion
The piping industry is not only expected to benefit from the government’s focus on expanding access in underserved areas, but also from a market shift from unorganised to organised players. As per Value Research, organised players held about 50% of the piping market, which increased to 70% by 2023. The top 5 players together command 40% of the pie.
This shift has benefited organised players and will likely continue to do so, driven by sustained government spending on water infrastructure. In addition, the growing real estate market also augurs well for the sector. As such, branded players like Supreme and Astral are best positioned to capitalise on these sectoral tailwinds.
Disclaimer
Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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