Buy Astral; target of Rs 2666: Anand Rathi

Anand Rathi's research report on Astral

In the extremely volatile PVC pricing context Astral’s performance was decent though revenue was up only 0.5% to a muted Rs13.7bn. Despite the challenging situation, the gross margin held y/y at a stable 38.9%. Cost front-loading in certain businesses at early stages led to the EBITDA margin coming 82bps lower y/y to 15.3%. PAT fell a huge 16% y/y due to other income down 34% y/y and depreciation/interest expense up 23%/27% y/y.

Outlook

We expect strong 18%/22%/24% revenue/EBITDA/PAT CAGRs over FY24-27; hence, upgrade the stock to a Buy with a TP of Rs2,666, 68.75x FY27e EPS (earlier a Hold, at a Rs1,793 TP, 62.5x FY25e).

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