Target: ₹1,949
CMP: ₹2,001
We interacted with management of Astral Ltd. Key takeaways are: Pipe demand trend continues to be steady in Q4-FY24- TD with 15 per cent+ volume growth YoY driven largely by the plumbing segment; Management expects operating margins to improve q-o-q in Q4-FY24 for both pipes (due to operating leverage in peak season and absence of any material inventory losses) and adhesives (due to continued benign raw material prices and no inventory losses from Seal IT); Ramp-up in bathware segment (sanitaryware & faucetware) is as per schedule and the company targets ~INR 1bn revenues from this segment in FY25 with at least EBIDTA break-even; and Paint segment will likely start delivering better performance from FY25, as it will be launched in many new states.
According to management, Astral is on track to achieve pipe volume growth of over 20 per cent and adhesive revenue growth of 15-20 per cent y-o-y in FY24. Astral has near-term demand and margin tailwinds in its major businesses of pipes and adhesive.. We continue to like Astral for its strong brand, comprehensive product portfolio, wide distribution reach and robust balance sheet.