Astral Ltd. share price target

Reported a healthy pipe margin in Q4FY25, despite operating amidst weak demand conditions and falling resin prices

Astral Ltd (ASTRA) has reported soft volume growth of 1.3% in the plastic pipe segment (as expected) due to weak demand scenario and delays in ADD on PVC resin prices. However, its plumbing EBITDA margin remain flat YoY at 20.4%, with EBITDA per kg for the plastic pipe segment at Rs37 even after inventory loss in Q4FY25. This was considered healthy given the current challenging demand environment, largely due to an increase in the VAP mix and cost rationalization efforts. With the upward reversal in PVC resin prices,...

As per market consensus, Astral Ltd. is currently trading at 1year fwd. P/E of 51x (which is at ~23% discount to 5 year Avg P/E. 67x). The long-term growth story of Astral is intact on the back of superior product mix, leadership within CVC pipes segment, new launches, an extensive distribution network and a healthy balance sheet....

We recommend a BUY rating on the stock with a target price of Rs 1,475/share, implying an upside of 10% from the CMP.

In the extremely volatile PVC pricing context Astral’s performance was decent though revenue was up only 0.5% to a muted Rs13.7bn.

Demand headwinds eased by healthy plumbing margins

Continuous EBITDA deterioration due to low PVC Prices, and higher PEx multiples are not sustainable. Therefore, we retain our HOLD rating with TP Rs 1,800/share.

We retain BUY on Astral with a revised PT of Rs. 2,150, factoring downwardly revised estimates and valuation multiple owing to near-term demand sluggishness.

Misses estimates on weak pipe volumes (-2.5% YoY) and continued subdued performance of SEAL IT & paints business

We interacted with Astral Ltd (Astral’s) management. Demand in pipe market was muted in Jul–Aug’24 due to volatility in PVC prices.

We have Hold on the stock

In Q4FY24, Astral reported strong pipes volume growth of 22.8% YoY (3-year CAGR of 16.3%). Consol. revenue grew 7.9% YoY with pipes/adhesives segments growing 8.1%/7.3% YoY.

The management has guided for 15% consolidated revenue growth for the next 5 years. We have HOLD on the stock.

Plumbing volume shines; outlook promising

EBITDA miss by 6% compared to our estimate on continued weak performance of paints and adhesives segment