Astral Ltd. share price target

Robust performance with market share gain continues

Consolidated Q3 revenue grew ~23% YoY with pipe/adhesive segments up 25%/16%; pipe volumes dipped 4% due to dealer destocking

Industry leading performance continue

However, given limited short-term upside potential from the current levels but a positive long-term outlook on the company, we recommend a HOLD' rating on the stock with a TP of Rs 2,250/share, implying a downside of -4.6% from CMP.

We expect revenue and PAT CAGR of 19% and 17.5% over FY21-24E and recommend HOLD' with TP of Rs 2,250.

We recommend BUY with a target price of Rs 2,250/share (upside of 17%) valuing the stock at 65x FY22E.

Astral Ltd has reported an all-round performance in Q4FY21 with revenue and PAT coming in much ahead of our expectation. Consolidated revenue growth at 79% YoY to | 1128 crore was ahead of our expectation of 36% growth. This was mainly driven by strong performance of both piping and adhesive businesses. Standalone piping revenue increased 80% YoY to ~| 910 crore supported by ~26% YoY growth in volume. Strong demand from housing and construction segment helped drive volumes in Q4FY21. On the adhesive front, segment revenue growth at 78% YoY to | 241 crore...

Growth trajectory to get steeper on strong demand

Astral's Q4FY21 result was a beat to our and consensus estimates on key parameters. Strong demand in both pipes and adhesive segment led to healthy net sales growth, while cost cutting measures supported margins improvement. Net sales improved by 79.3% YoY to Rs11.2bn, while EBITDA was up by 126% YoY to Rs2.5bn. The company reported net profit of Rs1.7bn, growth of 241.3% YoY. Though there is marginal weakness in demand in April, 21 due to Covid-19 led state wise lockdown, the management remained confident to grow as things normalize. We believe the company is well placed to benefit from capacity expansion plan to cater to incremental demand,...

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