Buy Astral Ltd For Target Rs.1,813 by Prabhudas Liladhar Capital Ltd
Astral Outperforms on Strong P&F Momentum
Astral Ltd (ASTRA) reported healthy volume growth of 24.2% in the plastic pipe segment. The company delivered a plumbing EBITDA margin of 22.9% with a negligible impact of inventory gain. EBITDA per kg for the plastic pipes segment stood at Rs 41.9. The benefit of higher PVC resin prices is expected to reflect from Q1FY27 onwards. Management also expects PVC resin prices to rise further by Rs 5–7/kg, as China landing prices have already increased by Rs 3–4/kg. Accordingly, with rising raw material prices, volume offtake is expected to witness an uptick in the coming months. Post commissioning of the new CPVC resin plant, the company is expected to gain meaningful market share in CPVC pipes & fittings along with margin improvement, with the full benefits likely to accrue from FY28 onwards Company maintained its doubledigit volume growth guidance in the piping segment with EBITDA margin of 16-18%. We expect ASTRA will achieve 15.0% volume CAGR in its P&F business over FY26-28. During FY26, the Adhesive India business reported 15.1% revenue growth with EBITDA margin of 15.1%, while we expect double-digit revenue growth to continue going forward. We estimate sales/EBITDA/PAT CAGR of 16.6%/20.2%/31.3% over FY26-28E. We cut our earnings estimate for FY27/28E by 4.4%/4.0%. Maintain ‘BUY’ rating with revised DCF-based TP of Rs1,813 (Rs1,876 earlier)
Q4FY26 financial performance:
Revenues grew by 24.2% YoY to INR 20.9bn (PLe: INR21.7bn) led by healthy volume growth of 24.2% YoY in plumbing segment (Ple: 25.0%). Gross margin expanded by 80bps to 40.2%, (PLe: 39.1%). EBITDA stood at INR 4.0bn (up 32.1% YoY). EBITDA margin expanded by 110 bps to 19.1%, (Ple: 18.3%). EBITDA per Kg (incl. OI) for Plastic pipe segment at INR 41.9 vs INR 37.0 in Q4FY25. The adhesive business grew by 20.6% YoY to INR 4.8bn in Q4FY26 and Dom. Adhesive business grew by 20.4% YoY in Q4FY26. Adjusted EBITDA margin for the segment stood at ~13.8% (down ~60bps YoY), after accounting for one-off brand-building expenditure of INR 160mn and Paint & Adhesives at 11.0% (contracted by ~90bps YoY). PAT stood at INR 2.1bn (up 19.6% YoY).
FY26 financial performance:
Revenue grew by 12.6% to INR 65.7bn. P&F volume grew by 15.8% YoY, Plumbing segment grew by 11.5% YoY to INR 47bn, Paints and Adhesives grew by 15.5% to INR 18.9bn. Gross margin expanded by 250bps to 39.8%. EBITDA stood at INR 10.6bn (up 12.3% YoY). EBITDA margin remained flat at 16.2%. EBITDA per Kg (incl. OI) for Plastic pipe segment at INR 34.8 vs INR 35.2 in FY25 PAT grew by 3.0% YoY to INR 5.3bn
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SEBI Registration No. INH000000271Accumulate Paradeep Phosphates Ltd For Target Rs.141 by Prabhudas Liladhar Capital Ltd
