Sanitaryware category worst impacted in building materials sector: ICICI Securities
Declining demand for sanitaryware category in India is also impacting several unorganised players based in Thangadh and Morbi regions of Gujarat
A significant decline in new construction activity has led to branded sanitaryware players resorting to aggressive pricing, an analysis by ICICI Securities shows.
The category remains the worst impacted in the building materials space as sanitaryware significantly derives a high percentage of growth from the new construction, it said.
The limited opportunity in terms of replacement demand (driven by significant inconvenience) and shift from unorganised to organised segment would restrict category growth in such a challenging macro environment and would thus find limited growth avenues for branded players in the near term, the brokerage said, adding that segment growth would thus be limited to market share gains driven by aggressive pricing.
The declining demand for sanitaryware category in India is also impacting several unorganised players based in Thangadh and Morbi regions of Gujarat, it found.
Increasing under-utilisation, rising working capital requirements and improving compliance in the two regions are forcing several units to cut production or take a periodic shutdown, it stated.