As for interior goods inventory, it still doesn't seem very cozy.

Supreme Industries, Astral and Finolex Industries are expected to post double-digit volume growth in the fourth quarter of fiscal 2024. The benefits of channel restocking ahead of expected increases in polyvinyl chloride (PVC) prices from April should also show up in fourth-quarter earnings. Potential imposition of anti-dumping duties on PVC imports is a key factor to look out for in the near term. This could lead to further increases in PVC prices and prolong channel restocking, according to Nuvama Research.

Ceramic tile companies, on the other hand, are struggling due to muted demand growth. ICICI Securities expects production growth of 8% and 5.2% for Kajaria Ceramics and Somany Ceramics, respectively. Realised value is likely to decline moderately as competition intensifies and companies partially pass on the benefits of lower petrol prices. However, margins may moderate due to operating leverage.

Meanwhile, wood-based panel makers are likely to suffer a double whammy of weak volumes and sluggish profit margins. “The plywood segment is likely to register low to mid single-digit growth YoY. In the MDF (medium density fibreboard) segment, companies are aggressively increasing volumes in the domestic market with incentives of 5-6 per cent to gain market share. This could take a toll on EBITDA margins in the fourth quarter of FY24,” said analysts at MK Global Financial Services.

All this is happening at a time when timber prices are rising. Also, a one-year delay in implementing quality standards from the Institute of Indian Standards (BIS) is putting short-term strain on the MDF sector, which may lead to higher imports. MDF production in the fourth quarter is expected to take a hit due to higher imports and capacity expansion.

Residential real estate is booming and recent booking trends have been positive, but demand for later-stage building materials products such as ceramic tiles and wood panels has lagged.

Meanwhile, many home decoration stocks have fallen sharply from their 52-week highs. Weaker-than-expected earnings trajectories and exaggerated valuations have weighed on their stock prices. Also, many of these stocks are small and mid-cap stocks, which tend to fall more sharply than larger stocks during periods of market volatility, such as the recent correction. Therefore, any surge in these stocks must be accompanied by strong earnings growth.