Sharekhan's research report on Astral
In Q3, the company reported better than expected consolidated revenues led by strong volume growth in plumbing business. OPM stayed in-line affected by inventory losses. Net profi dip 27% y-o-y. Sustained demand environment to lead to healthy volume growth for FY2023 along with long term volume growth pegged at 12-15% y-o-y in plumbing. Reversal of raw material prices to improve OPM going ahead. The adhesives business is expected to face slower growth than earlier expected while bathware segment would require scale to make contribution to overall profitability. The scale-up of new businesses to be focus areas.
Outlook
We downgrade Astral Limited (Astral) to Reduce with a revised price target of Rs. 1825 led by downwardly revised estimates and unfavourable risk reward ratio at current valuation.
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