Hold Astral; target of Rs 1949: ICICI Securities

ICICI Securities research report on Astral

We interacted with management of Astral Ltd. (Astral). Takeaways: 1) Pipe demand trend continues to be steady in Q4FY24- TD with 15%+ volume growth YoY driven largely by the plumbing segment. 2) Management expects operating margins to improve QoQ in Q4FY24 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). 3) 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. 4) Paint segment will likely start delivering better performance from FY25, as it will be launched in many new states.

Outlook

According to management, Astral is on track to achieve pipe volume growth of >20% and adhesive revenue growth of 15%-20% YoY in FY24. We maintain our estimates and HOLD rating with an unchanged Mar’25E target price of INR 1,949.

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Astral - 15032024 - isci