Hold Astral; target of Rs 1956: ICICI Securities

ICICI Securities research report on Astral

We interacted with Astral Ltd (Astral’s) management. Key highlights: 1) Demand in pipe market was muted in Jul–Aug’24 due to volatility in PVC prices. However, now, with PVC prices having stabilised and ADD on CPVC announced, an uptick in demand is envisaged Sep’24 onwards. Thus, overall, Q2 volume growth should be in high single-digit to low double-digit. Management expects H2FY25 to ameliorate notably and maintains guidance of >15% YoY pipe volume growth for FY25. 2) Q2 pipe margins may see a slight dent due to PVC prices falling sharply in Q2FY25–TD; however, for full the year, Astral believes 16–18% margin, as guided, is achievable. 3) Adhesives business is growing steadily and on track to achieve 15–20% revenue growth for FY25. 4) Margins in adhesives should improve QoQ due to benign RM prices and some improvement seen in its UK subsidiary. Maintain HOLD; Jun’25E TP of INR 1,956 unchanged.

Outlook

We continue to like Astral for its strong brand, comprehensive product portfolio, wide distribution reach and robust balance sheet. However, we maintain our HOLD rating on the stock due to its limited upside, and await a better entry point. Our estimates and Jun’25E target price of INR 1,956 remain unchanged.

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