Home construction: Analysts bet on pipe makers; wary on tile, paint segment

The combined market size of the building material sector could touch Rs 2.7 trillion by FY26 from Rs 1.3 trillion in FY22

Despite expectations of a pick-up in construction activity during the seasonally strong January-March quarter (Q4), analysts are cautiously optimistic on the building material sector – encompassing paints, pipes, wood panels, tiles, metals, and cement – as volatile input costs, coupled with fears of a global slowdown, is making demand projections uncertain.

Against this backdrop, analysts suggest investors stay selective in the space and pick stocks of companies with stronger brand recall, expanding distribution networks, diversified product profiles, healthier balance-sheets, and sustainable cash flows.

"The government’s various proposals under Budget 2023 may lead to the building material growing between 8 and