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Target: ₹2,427
CMP: ₹1857.95
Astral’s plumbing business posted a revenue of ₹932 crore (up 11 per cent y-o-y versus a rise of 6 per cent/31 per cent/30 per cent for Prince Pipes and Fittings/Supreme Industries/Finolex Industries). This was led by robust volume growth (up 30 per cent y-o-y as against a rise of 35 per cent/82 per cent/92 per cent for Prince Pipes/Supreme Industries/Finolex Industries) on account of restocking by dealers and positive demand momentum from end-customers. The management indicated that demand in Q4 continues to be healthy, but slightly lower compared with Q3-FY23 levels. EBITDA margin contracted 484 bps y-o-y to 15.4 per cent due to inventory loss and an increase in operating overheads.
The management expects margin to improve as the faucets and sanitaryware business starts contributing to revenue.
Revenue from the paints and adhesives segment stood at ₹336 crore (flat q-o-q). EBITDA margin for the paints and adhesives segment contracted 190 bps y-o-y to 12.2 per cent due to higher chemical prices, delay in passing on increased cost, and inventory losses.
Given the company’s track record of successfully scaling up new businesses, as well as the management’s guidance of double-digit volume growth in the pipes business and over 15 per cent CAGR in the adhesive business over the next four-five years, we anticipate Astral’s growth trajectory to steepen.
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