Astral Q3 Results Review - Healthy Volume Growth, Momentum Continue: Prabhudas Lilladher

Prabhudas Lilladher Report

We downward revise our FY24 estimates by 7.9% after lowering our revenue estimate and incorporating one off expenses & higher interest expenses even as we upgrade to ‘Accumulate’ rating from Hold with revised discounted cash flow based target price of Rs 2,064 (earlier Rs 1983), which implies 56 times December 2025 earning per share.

Astral Ltd.'s maintained its volume growth guidance at greater then -20% in pipe and fittings business and 15%-20% rev. growth guidance in paints & adhesive business with consolidated Ebitda margin guidance of over 17%+.

Astral reported strong expansion in gross margin (plus 590 basis points YoY), despite inventory loss of Rs 200 million on account of correction in raw material prices (PVC price was down by -7% and CPVC price was down by -5% QoQ) because of increase in VAP mix and lower RM procurement cost.

However, increase in front-loaded expenses for growth, resulted in relatively lower expansion of Ebitda margin (plus 110 basis points YoY), which will reflect in numbers by coming quarters with product mix change and increase in revenue.

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