Astral - Growth Driven By Business Diversification: Prabhudas Lilladher

Prabhudas Lilladher Report

We met management of Astral Ltd. to gauge the demand scenario, competitive intensity, capacity expansion in plumbing segment and growth and margin guidance in adhesive segment.

The company has maintained its volume growth guidance at more than-20% in pipe and fittings business and 15%-20% revenue growth guidance in paints and adhesive business with consolidated Ebitda margin guidance of over 17% plus.

Astral is a consistent quality performer and we believe that it is a compounding story given its-

1. strong market-share gains in piping business,

2. strong growth in REX and tank businesses,

3. healthy growth path in bathware and paints business,

4. strong cash flow (of Rs 7.7 billion over FY24-25E) and

5. healthy growth in domestic adhesive business (+15.2%/>+20% in value/volune 9M FY24).

We estimate sales/Ebitda/profit after tax compound annual growth rate of 21.3%/26.1%/33.9% over FY24-26E.

We maintain ‘Accumulate’ rating with revised discounted cash flow based target price of Rs 2,244 (earlier Rs 2,064), which implies 57 times FY26 earnings per share.

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