Astral Upgraded To 'Neutral' By Yes Securities, Sees Margin Tailwinds From CPVC Resin Backward Integration
Yes Securities upgrades Astral from Reduce to Neutral, maintaining target price at Rs 1,371 (vs current market price Rs 1,269), implying an 8% upside.
Astral has entered into an agreement with Nexelon Chem Pvt Ltd. for acquiring 80% of equity for ~Rs 1.2 billion. Astral will set-up CPVC resin capacity of 40,000 tonne which will be operational by Q2 FY27. Management aims to expand margins with backward integration of plumbing business.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Yes Securities Report
Yes Securities shifted their stance on Astral Ltd from 'Reduce' to 'Neutral' citing improving margin prospects and attractive valuation after stock fell 34.5% YoY as of August 12, 2025.
Q1 revenue was flattish YoY, but operational leverage deteriorated due to poor show in the pipes segment, leading to a 437 bps fall in Ebitda margin sequentially.
Astral suffered an inventory loss due to falling resin prices, impacting Ebitda/kg in the core plumbing segment. Even after adjustments, Ebitda/kg is only in line with estimates.
Nexelon acquisition is a strategic backward integration into CPVC resin manufacturing. The new plant, coming online by Q2 FY27, will reduce working capital and raw material dependency – especially critical as Astral now holds 90 days of CPVC inventory.
The adhesives business showed decent topline growth but thinner margins with international (UK) business struggling due to forex losses; UK adhesive margins are expected to normalize to 8–10% longer-term.
Despite weak show in Q1, Astral reiterated its guidance for full-year volume growth across segments. Pipes and Adhesives are expected to grow in double digits, while Paints continue rapid expansion albeit on a smaller base.
Click on the attachment to read the full report:
ALSO READ
'Sell' Nykaa Shares Maintains Dolat Capital Despite Healthy Q1 Topline Citing Rich Valuations
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
