Astral Ltd.'s margin contracted in the first quarter but it expects the pricing pressure to ease as construction picks up post-monsoon, according to Chief Financial Officer Hiranand Savlani.
Astral's net profit jumped 20% but margin contracted by 400 basis points in the first quarter.
There was volume growth in the CPVC (chlorinated polyvinyl chloride) basket, though PVC (polyvinyl chloride) was subdued due to falling polymer prices, which deters dealers from keeping inventory, Savlani told BQ Prime's Niraj Shah.
Savlani expects PVC prices to settle and re-stocking of products by September or October.
With prices across categories of building materials gradually coming down, Savlani predicts that developers will resume construction activity in full swing, which will drive demand in the coming quarters.
"Our main focus is CPVC, and CPVC prices are still not falling. They are still stable. The biggest advantage in the CPVC basket is the anti-dumping duty," he said.
Even if prices slacken internationally, it will not benefit India as we have an anti-dumping duty, ranging between $1,900-$2,000 per metric tonne, he said. Hence, prices will not fall beyond that level and will stabilise by September, making things smooth from October, he said.
He expects the second half of the fiscal to have margins of 15-18%, depending on how volumes pick up.
Supply chains are no longer a concern as prices are falling sharply and material availability is improving, unlike previous quarters, he said.
For the sanitaryware business, Savlani is expecting good numbers from FY24 onwards. "We are piling up inventory at the warehouse level, so that we are ready to refill as and when required," he said.
Astral is also receiving a positive response from its dealers and distributors, Savlani said. "Many have already allocated the space for display. And our display centre is already open in Ahmedabad."
The company is targeting revenue of Rs 1,500 crore in the next five years from their new products. It is also looking to expand to other locations (it is currently focused in the southern states), Savlani said.
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