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Astral Ltd (ASTRA) has reported flat volume growth of 0.5% in the plastic pipe segment due to weak demand scenario and delays in ADD on PVC resin. Its plumbing EBITDA margin contracted by 150bps YoY to 16.4%, with EBITDA per kg for the plastic pipe segment at Rs 27.9 after inventory loss of Rs 250mn in Q1FY26. During the quarter, PVC prices declined by 14% YoY. However, from Q2FY26, prices stabilized, and volumes began to recover. In July’25, the company recorded a 30% YoY volume growth. We anticipate ASTRA will achieve 10.0% volume growth in its P&F business, along with a 13.6% revenue increase in its Paints & Adhesives segment in FY26. The company is also expected to maintain its EBITDA margin of >16% in the coming years. We estimate sales/EBITDA/PAT CAGR of 11.8%/13.8%/19.6% over FY25-27E. We downward revise ASTRA FY26/27E earnings by 10.0%/7.8%. Further, we revised DCF-based TP to Rs1,503 (Rs1,630 earlier) and Upgrade our rating to ‘BUY’ from ‘Accumulate’ due to recent correction in the stock prices.

Revenue declined by 1.6% YoY, PAT declined by 33.7% YoY: Revenue declined by 1.6% YoY to Rs13.6bn (PLe: Rs14.7bn) led by flat volume growth YoY in plumbing segment due to weak demand. Gross margin contracted by ~120bps at 39.4%, (PLe: 40.1%). EBITDA declined by 13.8% to Rs 1.8bn (PLe: Rs2.3bn). EBITDA margin contracted by 190bps YoY to 13.6%, (Ple 15.5%), primarily due to 14% YoY decline in PVC resin prices, which led to inventory losses and adversely impacted realizations. EBITDA per Kg (incl. OI) for Plastic pipe segment at Rs 27.9 vs Rs 32.6 in Q1FY25 and EBITDA margin of Paints and Adhesives business contracted by ~280bps YoY to 9.2%. PAT stood at Rs 792mn (down 33.7% YoY), 35.3% below our est. (Rs 1.2bn), Cash and cash equivalent stood at Rs 4.9bn. Astral has acquired an 80% stake in Nexelon Chem Pvt Ltd, planning to invest up to Rs1.2 bn in setting up a CPVC resin plant to secure key raw materials, reduce costs, and boost margins.

Concall Highlights: 1) Mgmt has guided a double-digit volume growth in the piping segment with the 16-18% EBITDA margin in FY26. Company highlighted that the double-digit growth guidance remains achievable, supported by multiple drivers: anti-dumping duty (ADD) implementation, BIS certification, higher government spending, and a recovering construction sector. If these factors play out favorably, growth could potentially reach ~15% or above. 2) UK adhesive business has stabilized and is showing recovery with 8% growth in Q1FY26. A new experienced leader has been appointed to drive the UK business turnaround. 3) The bathware segment grew by 27% YoY in Q1FY26, driven by strong market acceptance of Astral’s products. The order book remains healthy, with management aiming to sustain growth momentum through continued product launches and premiumization efforts. Company aims to reach Rs 5-6bn revenue in coming years. 4) Paint business delivered 20% growth. Company aims to maintain this growth trajectory in coming quarters. 5) Astral Kanpur plant is expected to commence commercial production in Q3FY26, adopting a phased rollout beginning with tank and PVC products. This facility is set to strengthen the company’s market presence in Northern India, especially in Uttar Pradesh, Bihar, and parts of Eastern NCR. 6) Management expects that ADD on PVC resin will be announced in Q2FY26, supporting both volume and value growth. PVC prices appear to have bottomed out, with a modest recovery likely ahead. 7) Astral has acquired an 80% stake in Nexelon Chem Pvt Ltd and will invest up to Rs 1.2 bn to set up a 40,000 MT CPVC resin plant, aimed at securing key raw materials, reducing costs, and improving margins. 8) It is expected to start commercial production by Q2FY27. Astral has developed in-house technology for CPVC resin manufacturing with technical assistance from its partner. 9) Currently, Astral maintains a 90-day CPVC resin inventory due to import dependency. Once the new CPVC plant is operational, inventory holding will drop sharply to 1–2 weeks, eliminating the need for long-term stockpiling. This will free up working capital, reduce storage costs, and improve supply chain efficiency. 10) Company reported an inventory loss of Rs 250mn which impacted the margins, however for Q2FY26 company is not expecting any inventory loss. 11) The company plans to invest Rs 3–3.5bn in capex during FY26, with Rs 500mn already deployed in Q1FY26, and is set to add 25,000 MT capacity at its Kanpur plant.

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