India Pipes: Near-term PVC risk + Astral‘s demerger announcement: Downgrade ASTRAL and SI to Neutral

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India Pipes: Near-term PVC risk + Astral‘s demerger announcement: Downgrade ASTRAL and SI to Neutral

J P M O R G A N Asia Pacific Equity Research

28 June 2026

India Pipes

Near-term PVC risk + Astral’s demerger

announcement: Downgrade ASTRA and SI to Neutral

While Astral’s announced demerger frees up the mature 'Plumbing' segment (~14- India Industrials, Electric Utilities,

15% PBT margin, 18 NWC days,~24% RoE in FY26) to be more aggressive on and Infrastructure Sectors

capital allocation, margins and channel incentives, it could negatively impact Rishabh Gupta AC

growth prospects of the still relatively sub-scale 'Paints & Adhesives’ segment (~4- (91-22) 6157-3429

5% PBT margin, 39 NWC days, ~5% RoE in FY26), where capex and A&P were rishabh.x.gupta@jpmorgan.com

being supported by the Plumbing business. Mathematically, ‘Paints & Adhesives’ Atul Tiwari

would be ~15% of consol PBT in FY28E and assuming 25x-35x FY28E P/E for (91-22) 6157-3582

the segment, the consol valuation drag would be restricted to 5-8%; however, cost/ atul.tiwari@jpmorgan.com

cash allocations remain to be seen. This does pose a risk for Supreme (SI), as Muskan Agarwal

(91-22) 6157-3226

potentially higher growth focus by Astral in ‘Pipes' could be a growth drag for muskan.x3.agarwal@jpmchase.com

Supreme, and makes it difficult to underwrite margin improvement at SI. Given the J.P. Morgan India Private Limited, J.P. Morgan

uncertainty, and the fact that near-term domestic PVC prices are likely to correct Tower, Santacruz(E), Mumbai - 400098, SEBI

Registration: INH000001873, (91-22) 6157-3000.

further (driving inventory losses/channel de-stocking) at a time when ASTRA/SI

start lapping a tough volume base (in 2Q), we recommend staying on the sidelines,

and downgrade both to Neutral (from OW).