Hold Astral; target of Rs 2244: Prabhudas Lilladher

Prabhudas Lilladher's research report on Astral

We met management of Astral Ltd. (ASTRA) to gauge the demand scenario, competitive intensity, capacity expansion in plumbing segment and growth & margin guidance in adhesive segment. The company has maintained its volume growth guidance at >-20% in pipe & fittings business and 15%-20% rev. growth guidance in paints & adhesive business with consolidated EBITDA margin guidance of over 17%+. Astral is a consistent quality performer and we believe that it is a compounding story given its (a) strong market-share gains in piping business, (b) strong growth in REX & tank businesses, (c) healthy growth path in Bathware & paints business, (d) strong cash flow (FCF of Rs7.7bn over FY24-25E) and (e) healthy growth in dom. adhesive business (+15.2%/>+20% in value/vol. 9MFY24).

Outlook

We estimate Sales/EBITDA/PAT CAGR of 21.3%/26.1%/33.9% over FY24-26E. We maintain ‘Accumulate’ rating with revised DCF based TP of Rs 2,244 (earlier Rs 2,064), which implies 57x FY26 EPS.

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