Motilal Oswal's research report on Astral
Astral’s (ASTRA) Board has approved the business restructuring plan to consolidate its Plumbing and Chemical businesses into separate entities. It will take 9-12 months to complete the demerger process. The large capex cycle is behind, and ASTRA aims to grow at a fast pace across both entities due to concentrated focus. While management’s intention about the demerger is positive, ramp-up in its India and overseas adhesive businesses and the newly added paint business will be the key, in our view, and will decide the overall valuation of ASTRA. After delivering a modest CAGR of 16%/11% /7% in revenue/EBITDA/APAT over FY21-26, we estimate a CAGR of 16%/20%/25% over FY26-28 with its RoE and RoCE (pre-tax) reaching ~17% and ~24%, respectively, in FY28.
Outlook
We believe the current valuation of ~45x FY28E P/E broadly factors in the expectation of improving financials. Following ~15% correction in the stock price from the recent high in Mar’26, we reiterate our BUY rating but reduce our TP to INR1,710, based on ~52x FY28E P/E.
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Astral - 2906026 - moti