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IDBI Capital Report
Astral Ltd.’s Q2 FY23 result was above our estimates on net sales front, while margins disappointed. Sharp increase in raw material prices led to inventory destocking by the dealers resulting weak performance of plastic division.
Net sales was down by 2.4% YoY to Rs 12.7 billion, while Ebitda declined by 31.9% YoY to Rs 1.4 billion. Astral reported net profit of Rs 0.7 billion, a sharp fall of 50.1% over Q2 FY22.
The management remained confident of high teens growth in core businesses as well as new businesses to contribute meaningfully in near term.
However, we are skeptical about margins and believe that incremental growth may come at a cost, denting operating margins. We have cut our earnings estimated for FY23E/FY24E.
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