Whalesbook
The brokerage's decision to lower earnings estimates for FY27/28 by 4.4% and 4.0% respectively, and to reduce the target price to ₹1,813 from ₹1,876, appears to stem from anticipated shifts in raw material costs. PL Capital expects PVC resin prices to increase by ₹5–7 per kg, influenced by rising China landing prices.
Astral's reported Q4 performance showcased significant strength, with the plastic pipe segment achieving a notable 24.2% volume growth. The company posted a healthy plumbing Ebitda margin of 22.9%, with minimal impact from inventory gains. Ebitda per kilogram for plastic pipes stood at Rs 41.9. Management projects that the full benefit of higher PVC resin prices will be reflected from Q1 FY27 onwards.
Future Outlook and Growth Drivers
Furthermore, the commissioning of the new CPVC resin plant is poised to bolster Astral's market share in CPVC pipes and fittings, with margin improvements expected to fully materialize from FY28. The company has maintained its guidance for double-digit volume growth in the piping segment, targeting an Ebitda margin of 16-18%. PL Capital forecasts a 15.0% volume CAGR for the P&F business over FY26-28. The Adhesive India business also demonstrated resilience with 15.1% revenue growth and a 15.1% Ebitda margin in FY26.
Brokerage Revisions
Despite these promising growth trajectories and the maintenance of a 'Buy' rating, PL Capital projects sales/Ebitda/PAT CAGRs of 16.6%/20.2%/31.3% over FY26-28E. The brokerage's forward-looking perspective, factoring in raw material dynamics and future plant contributions, led to the revised estimates and target.