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Systematix Research Report
Astral Ltd.'s Q4 came broadly inline as weak result in adhesives and paints (revenue up 4% YoY, Ebitda margin 12.9%) was offset by strong pipes Ebitda (20.4% margin, Rs 38/kg). Pipes volume/revenue grew 23%/9% YoY.
It generated a strong Rs 8.2 billion CFO in FY24 (utilized for Rs 5.5 billion capex). Cash surplus of ~Rs 6 billion will be used for growth capex. After 24% pipes volume growth in FY24, Astral has maintained its 15-20% CAGR guidance (versus 10-12% for industry) for next few years.
Ebitda margin (18%+) will be aided by savings from logistics costs (plants across regions), lower advertising and promotion spend (FY24: Rs 1.75 billion including Rs 350 million one-time spend on 25th anniversary celebration; to discontinue big celebrity endorsement) and operating leverage benefits.
Hyderabad (June 2024) and Kanpur (Q4) plants are scheduled to start production in FY25. Starting from Ahmedabad, O-PVC pipes will be manufactured at all plants.
Water tanks (FY24 revenue: Rs 1.15 billion; 20% CAGR) and Bathware (FY24/25E revenue: Rs 620 million/1.25 billion, Ebitda breakeven in FY25 from Rs 180 million loss in FY24) are high growth areas.
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