Hold Astral; target of Rs 1955: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Astral with a target price of Rs 1955 in its research report dated August 12, 2023.

Broker Research

August 17, 2023 / 08:04 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Astral

Astral Ltd (ASTRA) maintained its volume growth guidance at 15-20% in pipe & fittings business and ~15%/20% vol./rev. growth guidance in paints & adhesive business, with consolidated EBITDA margin guidance of 17-18% alongside improvement in volume & correction in RM prices and breakeven in sanitaryware business in H2FY24. ASTRA reported strong expansion in gross margin (+610bps YoY) in Q1FY24, however, due to product mix (PVC higher contribution in Q1), inventory loss (Rs 150mn) and increase in front-loaded expenses for growth, resulted relatively lower expansion in EBITDA margin (+160bps YoY), which will reflect in number in coming quarters with product mix change & increase in revenue.

Outlook

ASTRA trades at rich valuation of 64x 1yr fwd earnings and in the recent past, post bonus issuance and our initiating coverage, stock has given 50%+ return. We still believe that ASTRA is a consistent quality performer and is a compounding story on back of strong industry tailwinds and robust guidance on volume & margins across segment for FY24-25. We estimate Sales/EBITDA/PAT CAGR of 17.4%/25.7%/34.3% over FY23-25E and value the stock on DCF based TP of Rs1,955 which implies 63x FY25E EPS. Maintain ‘HOLD’.

For all recommendations report, click here