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Robust volume growth, despite weak demand

Quick Pointers:

* Robust 20.6% YoY volume growth in P&F despite weak demand.

* EBITDA per Kg stood at Rs 34.8 in P&F segment.

Astral Ltd (ASTRA) has reported robust volume growth of 20.6% in the plastic pipe segment in weak demand scenario. Its plumbing EBITDA margin expanded by ~70bps YoY to 19.0%, with EBITDA per kg for the plastic pipe segment at Rs 34.8. Company maintained its double-digit volume growth guidance in the piping segment with margin of 16-18%. We anticipate ASTRA will achieve 14.7% volume growth in its P&F business. Astral has appointed a new CEO for its UK adhesives business and expects a steady recovery ahead. The company also expects the imposition of ADD by Nov’25, which could lead to a Rs 5–6/kg increase in PVC prices, likely boosting volumes further. We estimate sales/EBITDA/PAT CAGR of 14.6%/16.8%/21.6% over FY25-28E. We upward revise ASTRA FY27/28E earnings by 2.6%/1.9%. Maintain ‘BUY’ rating with revised DCF-based TP of Rs1,778 (Rs1,727 earlier).

Q2FY26 financial performance: Revenues grew by 15.1% YoY to Rs15.8bn (PLe: Rs14.1bn) led by robust volume growth of 20.6% YoY in plumbing segment in weak demand environment. Gross margin expanded by ~70bps at 39.6%, (PLe: 39.0%). EBITDA stood at Rs 2.6bn (up 22.2% YoY,) (PLe. Rs2.1bn). EBITDA margin expanded by 95bps YoY to 16.3%, (Ple: 15.0%). EBITDA per Kg (incl. OI) for Plastic pipe segment at Rs 34.8 vs Rs 35.5 in Q2FY25 and EBITDA margin of Paints and Adhesives business expanded by 180bps YoY to 12.1%. PAT stood at Rs 1.3bn (up 24.0% YoY). Cash and cash equivalent stood at Rs 5.6bn.

H1FY26 financial performance: Revenue grew by 6.7% YoY to Rs29.4bn led by volume growth of 10.1% in plumbing segment. Plumbing revenue grew by 8.0% YoY to Rs20.7bn and Paints and Adhesives grew by 19.1% YoY to Rs8.7bn. EBITDA grew by 4.1% YoY to Rs4.4bn. Margin contracted by ~40bps to 15.0% due to inventory loss reported in Q1FY26 of Rs250mn. PBT declined by 7.1% YoY to Rs2.9bn. PAT declined by 6.2% to Rs2.1bn.

Concall Highlights: 1) Mgmt has maintained its double-digit volume growth guidance in the piping segment with margin of 16-18% in FY26. 2) The UK adhesive business, earlier under pressure, is showing signs of recovery with ~5% revenue growth with a margin of 7.3% in Q2FY26. ASTRAL has acquired the remaining stake to make it a wholly owned subsidiary and appointed a new India-based CEO with over 25 years of experience, with expectations of returning to double-digit growth ahead. 3) The adhesive business continues to grow at 15%, supported by market share gains through new geographies, product launches, and a stronger rural presence. Company expects EBITDA margins in the range of 15–16%. 4) In the Bathware segment, company expects 20% revenue growth in FY26 and a CAGR of 20–25% over the next five years. 5) In Paints segment company opened nine depots across Gujarat, Rajasthan, and Maharashtra, leading to temporary margin pressure from higher costs. However, the company remains confident of achieving its 20% revenue growth guidance for FY26 with improved margins ahead. 6) The ADD on PVC is expected to come by 12th Nov’25, Post which the PVC prices might go up by Rs5-6/kg. The channel inventory still remains very low, which might increase post ADD implementation. 7) Astral has acquired an 80% stake in Nexelon Chem Pvt Ltd and will invest up to Rs 1.2 bn to set up a 40,000 MT CPVC resin plant, aimed at securing key raw materials, reducing costs, and improving margins. 8) For the CPVC segment, design work for the new plant is nearing completion, with construction and machinery ordering set to begin next month. Installation and commissioning are targeted for completion by Sept’26. 9) Astral has significantly expanded its product basket over the past 3–4 years, with strong performance from new offerings such as water tanks, wall projects, fire sprinkler pipes, OPVC, PTMT, and low-noise pipes — all delivering healthy margins and growth. The Hyderabad plant has commenced operations and is ramping up, while the Kanpur plant is gearing up to contribute meaningfully from Q4FY26. 10) The company plans to invest Rs 3–3.5bn in capex during FY26.

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