Hold Astral; target of Rs 2225: Prabhudas Lilladher

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Prabhudas Lilladher's research report on Astral

We downward revise Astral Ltd (ASTRA) FY25/26E earnings by 7.7%/6.8% factoring in margin contraction along with rising domestic price competition and vol. growth guidance of 15% in the pipe & fittings segment. ASTRA changed its volume growth guidance to >15% in pipe & fittings business against earlier 15%-20%, but maintained its rev. growth guidance in paints & adhesives business at 15-20%. The company reported healthy expansion in gross margin (~330bps YoY) on account of increase in VAP mix and lower RM procurement cost.

Outlook

However, increase in employee, branding and promotion expenses for growth, resulted in EBITDA margin contraction (~20bps YoY). We estimate sales/EBITDA/PAT CAGR of 20.6%/23.4%/29.8% over FY24-26E. Maintain HOLD rating with revised DCF-based TP of Rs2,225 (Rs2,330 earlier).

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Astral - 120824 -prabhu