Sharekhan's research report on Astral
In Q4, the company reported strong beat on consolidated net earnings led by better than expected OPM. Higher contribution from CPVC product sales and operating leverage led to strong beat on OPM. Management expects strong volume growth in plumbing business of 15-20% y-o-y for FY2024 while it retained its earlier guidance of growing its consolidated revenues at 15% CAGR over the next five years. Due to robust demand, it would be setting up 70,000 MT capacity Hyderabad, 15,000 MT capacity at Guwahati and undertake balancing expansions at existing locations.
Outlook
We upgrade the stock to Hold with a revised price target of Rs. 1,820, factoring upwardly revised estimates and higher earnings multiple considering healthy demand outlook over the next 2-3 years.
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