Accumulate Astral; target of Rs 2627: Asit C Mehta

Asit C Mehta report on Astral

Astral Ltd. (ASTRAL) was incorporated in 1996, with the aim to manufacture pro-India plumbing and drainage systems in the country. It is amongst the fastest-growing and leading companies in the category of building materials with presence across pipes and adhesives, and is now foraying into paints, faucets & sanitary ware and valves and Infrastructure. It is a prestigious manufacturer of Chlorinated Poly Vinyl Chloride (CPVC) and Poly Vinyl Chloride (PVC) plumbing systems catering to both residential and industrial use. With a commanding market share in the domestic CPVC and PVC pipe industry, the Company has achieved widespread recognition as a leader in the piping segment. It operates several manufacturing facilities across India, including Santej, Dholka (Gujarat), Hosur (Tamil Nadu), Ghiloth (Rajasthan), Sangli (Maharashtra), Sitarganj (Uttarakhand), Aurangabad (Maharashtra), and Bhubaneswar (Odisha), which are capable of producing a range of products such as plumbing systems, drainage systems, agricultural pipes, industrial pipes, fire protection pipes, electrical conduit pipes, and infrastructure products.

Outlook

We estimate revenue CAGR of 17% from FY23 to FY26E, with recommendation to "Accumulate" with a target price of Rs 2,627, reflecting a potential upside of 26%, based on a PE multiple of 84x to FY26E EPS of Rs 31.28.