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    Astral

    ASTRAL
    Capital Goods·12 Aug 2025
    Management Summary

    Astral Limited reported a mixed Q1 FY26, with strong growth in Bathware and Paint segments, and a strategic announcement of a CPVC resin manufacturing plant. However, the core plumbing division faced de-growth and flat volumes, contributing to a decline in consolidated EBITDA margins, partly due to inventory losses. Management remains optimistic about achieving double-digit growth for the full year, banking on demand revival and benefits from backward integration.

    Highlights

    5
    • Bathware business achieved 27% growth in Q1 FY26, with a healthy and growing project order book.

    • Paint business delivered 20.72% growth in Q1 FY26, the first time after acquisition, driven by Astral brand launches.

    • Adhesive India business grew 9.15% in Q1 FY26, with July numbers indicating a trajectory towards 15-16% guidance.

    • Announcement of a 40,000 MT CPVC resin manufacturing plant (Q2 FY27 commissioning) is expected to significantly improve volumes and margins, with a low investment of Rs. 120 crores for Astral's 80% equity.

    • Management is confident of achieving double-digit volume growth for FY26, with demand picking up from July onwards and expectations of a strong festive season.

    Concerns

    4
    • Plumbing division revenue de-grew 5.85% in Q1 FY26 to Rs. 953 crores, and pipe volume was flat due to low demand, early monsoon, and low government spends.

    • Consolidated EBITDA margin dropped to 14.25% in Q1 FY26 from 16.36% in Q1 FY25, primarily due to an inventory loss of Rs. 25 crores from polymer price drops.

    • Paint business EBITDA margin significantly declined to 1.4% in Q1 FY26 from 9.64% in Q1 FY25, attributed to initial spending on new brand launches and team expansion.

    • Employee expenses increased due to hiring for new businesses and top-line erosion from falling polymer prices.

    What Changed1

    vs Q2 FY26

    Guidance items13 → 9 (-4)

    Key financials

    Single quarter

    06 metrics
    1. 01Plumbing Revenue₹953 Cr-5.9%YoY
    2. 02Adhesive India Revenue₹261 Cr+9.2%YoY
    3. 03Adhesive UK Revenue₹96 Cr+7.0%YoY
    4. 04Paint Revenue₹50 Cr+20.7%YoY
    5. 05Bathware Revenue₹33 Cr+27%YoY

    Segment breakdown

    • Plumbing Division₹953 Cr68.4%
    • Adhesive India Business₹261 Cr18.7%
    • Adhesive UK Business₹96 Cr6.9%
    • Paint Business₹50 Cr3.6%
    • Bathware Business₹33 Cr2.4%
    Donut· Share of Revenue

    Order Book

    low confidence

    "The Bathware project order book is healthy and growing quarter-on-quarter, and good orders have started coming in for OPVC lines, especially with anticipated government spending."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    ₹50 crores this quarter · ₹300 crores (FY26) planned

    M&A

    Nexelon (CPVC resin manufacturing)

    acquisition · announced · Consideration ₹NaN (mixed)

    Guidance & targets

    8
    CategoryTargetPriority
    Growth
    Adhesive India Business Growth
    15-16%
    High
    Growth
    Paint Business Top-line Growth
    minimum 20%
    High
    Margin
    Adhesive India Business Margins
    14-16%
    High
    Margin
    Piping Business EBITDA Margin
    16-18%
    High
    Capacity
    CPVC Resin Manufacturing Capacity
    40,000 metric ton
    High
    Timeline
    CPVC Resin Plant Commissioning
    Q2 FY '27
    High
    Capex
    FY26 CAPEX
    around Rs. 300 crores
    High
    Market Share
    Bathware Top-line
    Rs. 500-600 crore
    Medium

    PVC Anti-Dumping Duty Announcement

    next quarter
    CurrentExpected in Q1 FY26
    TargetAnnouncement of ADD

    Why it matters

    ADD is expected to aid volume and value growth in PVC, and management believes PVC prices have bottomed out.

    PVC anti-dumping duty can be announced in this quarter and it will aid in volume growth and value growth as well once it is announced. We expect some uptick in PVC prices. So, one can say safely that the PVC has more or less bottomed out.

    How to verify

    guidance_and_targets

    Risks & concerns

    4
    RiskSeverity

    Low demand and government spending

    Low demand, early monsoon, and low government spends led to flat pipe volume in Q1 FY26.Management acknowledged

    medium

    Polymer price volatility and inventory losses

    A drop in polymer prices resulted in an inventory loss of Rs. 25 crores in Q1 FY26, impacting EBITDA margins.Management acknowledged

    medium

    Challenges in integrating acquisitions and managing new businesses

    Acquisitions in India involve challenges like legacy manpower, change management, and initial high spending on branding and team expansion, impacting early-stage profitability.Management acknowledged

    medium

    Market volatility and difficulty in predicting future prices

    The volatile nature of polymer prices and the timing of ADD/BIS announcements make it difficult to predict realization numbers for the balance of the year.Management acknowledged

    low

    Q&A highlights

    7

    “this margin expansion will definitely be there. Exactly how much will be there the market situation will decide because we have to take a call at that point of time that how much we want to pass on to the market to gain the volume very fast, and secondly, how much we want to retain to improve our margin. So, we are going to split the profit into volume growth as well as into margin growth.”

    Analysts questioned the magnitude of margin improvement and whether the initial 40,000 MT capacity would be sufficient, indicating a focus on the long-term impact of this strategic investment.

    asked by Shravan Shah

    3 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview and Segmental Highlights

    Astral Limited reported a mixed Q1 FY26. The core Plumbing division experienced a 5.85% de-growth in revenue to Rs. 953 crores, with flat pipe volumes attributed to low demand and government spending. In contrast, new business verticals showed strong momentum: Bathware grew by approximately 27% to Rs. 33 crores, and the Paint business saw a 20.72% increase in revenue to Rs. 50 crores. The Adhesive India business recorded a 9.15% growth to Rs. 261 crores, while Adhesive UK grew 7% to Rs. 96 crores. Consolidated EBITDA margin for the quarter stood at 14.25%, a decline from 16.36% in Q1 FY25, primarily impacted by a Rs. 25 crores inventory loss due to polymer price drops.

    02

    Strategic Backward Integration: CPVC Resin Manufacturing Plant

    Astral announced a significant backward integration move with the establishment of a 40,000 metric ton CPVC resin manufacturing plant, slated for commissioning in Q2 FY27. This project, with a total investment of Rs. 150 crores (Astral's share: Rs. 120 crores for 80% equity), follows three years of in-house R&D. The plant is expected to be a 'game-changer,' enabling Astral to grow volumes, increase margins (with other players seeing 25-30% EBITDA margins in CPVC), and ensure product quality consistency. Management anticipates a fast payback period and considers it a 'zero investment' due to substantial working capital benefits from reduced imported CPVC inventory.

    03

    New Business Verticals: Growth and Challenges

    The Bathware business demonstrated robust growth of 27% in Q1 FY26, with a healthy and growing project order book. Management aims to maintain this momentum and target crossing Rs. 500-600 crores in top-line in the coming years, acknowledging the long conviction cycle required for B2C products. The Paint business, for the first time post-acquisition, achieved 20.72% growth, driven by Astral brand launches in new territories. However, initial spending on branding and team expansion led to a low EBITDA margin of 1.4% for the Paint segment, which is expected to improve with increasing volumes.

    04

    Adhesive Business Performance and Turnaround Efforts

    The Adhesive India business grew 9.15% in Q1 FY26, with July numbers indicating it is on track to meet the 15-16% growth guidance for the four-month period, maintaining margins within the 14-16% guided limits. The Adhesive UK business, after facing challenges, stabilized and grew 7% in Q1, achieving an EBITDA margin of 5.4% (adjusted for Forex effects). A new senior leader with over 25 years of industry experience has been appointed to head the UK operations, and management expects a significant turnaround in the coming quarters, aiming for historical EBITDA margins of 8-10%.

    05

    Volume and Demand Outlook for FY26

    Despite a flat pipe volume in Q1 FY26 due to subdued demand, early monsoon, and low government spending, management expressed confidence in achieving double-digit volume growth for the full fiscal year. They noted that volumes started picking up from July onwards and anticipate a strong demand revival from the third week of August, extending through the festive season (Diwali in October). The narrowing price gap between CPVC and PVC is also expected to drive conversion to CPVC, further boosting industry volumes. Potential PVC anti-dumping duties are also seen as a catalyst for volume and value growth.

    06

    Capital Expenditure and Return on Equity

    Astral spent Rs. 50 crores on CAPEX in Q1 FY26 and maintains its FY26 guidance of around Rs. 300 crores, primarily for the Kanpur plant and initial work on the CPVC resin plant. The Rs. 120 crores investment for the CPVC plant will be spread over 12 months. Management clarified that no significant capacity expansion in the pipe category is planned for the next 2-3 years, with future CAPEX being maintenance-related. Addressing concerns about declining ROE, management attributed it to Rs. 1,500 crores of CAPEX over the last three years coinciding with unfavorable market conditions, expecting ROI and ROC to improve as asset utilization increases and CAPEX stabilizes.

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