Buy Astral; target of Rs 1830: Prabhudas Lilladher

Prabhudas Lilladher's research report on Astral

We upward revise our FY24/FY25 earnings estimate by 9.3%/12.9% to factor in 1) higher vol. growth guidance of 15-20% in pipe & fittings, 2) paints & adhesive business rev. growth guidance of ~20%, and 3) increase in EBITDA margin guidance to 17-18% (earlier around 16-16.5%) with improvement in volume & correction in RM prices and breakeven in sanitaryware business in H2FY24. Astral Ltd (ASTRA) trades at rich valuation of 50-60x 1yr fwd earnings and in the recent past, post bonus issuance and our initiating coverage, stock has given 25%+ return. We still believe that ASTRA is a consistent quality performer and it is a compounding story on back of its strong performance in FY23 and robust guidance of volume & margins across segment for FY24-25.

Outlook

We estimate Sales/EBITDA/PAT CAGR of 17.4%/25.7%/34.3% over FY23-25E and value the stock on DCF based revised TP of Rs1,830 which implies 59x FY25E EPS (earlier Rs 1,620). Maintain ‘BUY’.

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