Buy Astral; target of Rs 1630: Prabhudas Lilladher

Prabhudas Lilladher's research report on Astral

Astral Ltd (ASTRA) has reported soft volume growth of 1.3% in the plastic pipe segment (as expected) due to weak demand scenario and delays in ADD on PVC resin prices. However, its plumbing EBITDA margin remain flat YoY at 20.4%, with EBITDA per kg for the plastic pipe segment at Rs37 even after inventory loss in Q4FY25. This was considered healthy given the current challenging demand environment, largely due to an increase in the VAP mix and cost rationalization efforts. With the upward reversal in PVC resin prices, channel inventory is expected to improve. We anticipate ASTRA will achieve 12% volume growth in its P&F business, along with a 14.6% revenue increase in its Paints & Adhesives segment in FY26.

Outlook

The company is also expected to maintain its EBITDA margin >16% in the coming years. We estimate sales/EBITDA/PAT CAGR of 15.2%/16.6%/24.6% over FY25-27E. We downward revise ASTRA FY26/27E earnings by 2.2%/2.2% factoring in the increase in depreciation with increased capex. Further, we revised DCF-based TP to Rs1,630 (Rs1,532 earlier). Maintain ‘BUY’.

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