Accumulate Astral; target of Rs 2064: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Astral with a target price of Rs 2064 in its research report dated January 31, 2024.

Broker Research

February 06, 2024 / 10:00 IST

Accumulate

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Astral

We downward revise our FY24 estimates by 7.9% after lowering our revenue est. and incorporating omne off expenses & higher interest expenses even as we upgrade to ‘Accumulate’ rating from Hold with revised DCF based TP of Rs 2,064 (earlier Rs 1983), which implies 56x Dec’25 EPS. Astral Ltd (ASTRA) maintained its volume growth guidance at >-20% in pipe & fittings business and 15%-20% rev. growth guidance in paints & adhesive business with consolidated EBITDA margin guidance of over 17%+. The company reported strong expansion in gross margin (+590bps YoY), despite inventory loss of Rs 200mn on account of correction in RM prices (PVC price was down by -7% and CPVC price was down by -5% QoQ) because of increase in VAP mix and lower RM procurement cost. However, increase in front-loaded expenses for growth, resulted in relatively lower expansion of EBITDA margin (+110bps YoY), which will reflect in numbers by coming quarters with product mix change & increase in revenue.

Outlook

We believe that Astral is a consistent quality performer and a compounding story. We estimate Sales/EBITDA/PAT CAGR of 17.5%/24.6%/32.2% over FY23-26E. The stock is trading at 60x/47x FY25/FY26 earnings. In anticipation of higher volume growth in plumbing segment and adhesive segment, we marginally downward revise our FY25/FY26E earnings by 2.6%/1.4%. Upgrade to ‘Accumulate’.

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