Target: ₹1,714
CMP: ₹1,480.50
Astral’s Q4FY26 result was broadly in-line with our estimates on net sales and EBITDA, while PAT was a disappointment. After a relatively-muted 9MFY26 performance, it reported a good show in Q4FY26 on key parameters. Net sales increased 24.2 per cent year on year to ₹2,090 crore, while EBITDA came in at ₹380 crore, up 26.8 per cent. It reported net profit of ₹210 crore, up 19.6 per cent.
Astral has guided for a plumbing volume growth of 10-15 per cent for FY27. The company has guided for healthy growth in its core businesses in the near term. Further, the backward integration plant for CPVC resin is under active construction with machinery installation set for October. The management expects this backward integration to expand piping margins by about 200 basis points.
The management indicated that the three-year polymer deflation cycle has bottomed out, giving way to an inflationary trend. Prices are expected to rise further due to the reinstatement of a 7.5-8 per cent import duty on polymers, effective July 1.
We have marginally revised our earnings estimates upward, aligning it with the management guidance. Post recent correction in the stock price, value looks lucrative from current level. We upgrade the stock to Buy with a revised TP of ₹1,714, assigning 55x PER on FY28E.