Prabhudas Lilladher's research report on Astral
Astral Ltd has announced the demerger of its businesses into Astral Ltd. (Plumbing) and Astral Chemie (Adhesives, Paints & Specialty Chemicals), wherein management outlined the strategic rationale behind creating two focused entities with independent capital allocation, dedicated management teams and enhanced operational efficiency. Management highlighted that the restructuring will enable each business to pursue its own growth strategy while improving financial transparency through separate reporting from Q1FY27 onwards. The Plumbing business is expected to benefit from the upcoming CPVC backward integration, continued product additions and healthy growth across the faucets and sanitaryware portfolio, while Astral Chemie is entering a phase of stronger profitability driven by the completion of its major capex cycle, improving performance in the Paints business, the turnaround of the UK and US operations, and the scaling up of the high-margin DSS specialty chemicals platform. Over the medium term, management targets Astral Chemie to expand revenue from INR 18.6bn in FY26 to INR 44–50bn over the next four to five years while improving EBITDA margins to 14–15%.
Outlook
We estimate sales/EBITDA/PAT CAGR of 18.8%/22.5%/34.4% over FY26-28E. Maintain ‘BUY’ rating with revised SOTP-based TP of INR 1,779 (INR 1,863 earlier).
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Astral - 2906026 - prabhu