Astral - Demand, Margin Trends Remain Favorable: ICICI Securities
We believe Astral has near-term margin and demand tailwinds in both its major businesses.
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ICICI Securities Report
We interacted with the management of Astral Ltd. and following are the key takeaways:
the demand trend in pipe market remains healthy in Q4 FY23-to-date with double-digit volume growth YoY driven by the plumbing segment;
operating margins are expected to improve QoQ in Q4 FY23 for both pipes (as inventory losses are not likely to recur in Q4 given that PVC resin prices have stabilised) and adhesives (fall in raw material prices to result in normalised margins);
ramp-up in bathware segment (sanitaryware and faucetware) is progressing well and the company has opened ~320 showrooms/display centres as of February 2023.
According to management Astral is on track to achieve pipe volume growth and adhesive revenue growth in high double-digits YoY in FY23.
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