Astral Limited — Q1 FY26 earnings call

Call held 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

  • 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

  • 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.

Key financials

  1. Plumbing Revenue ₹953 Cr -5.9%YoY
  2. Adhesive India Revenue ₹261 Cr +9.2%YoY
  3. Adhesive UK Revenue ₹96 Cr +7%YoY
  4. Paint Revenue ₹50 Cr +20.7%YoY
  5. Bathware Revenue ₹33 Cr +27%YoY
  6. Consolidated EBITDA Margin 14.3%

What they filed

Q1 FY27: revenue up 15.9%, net profit up 51.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,370 1,397 1,681 1,361 1,577 +15%1,542 +10%2,088 +24%1,578 +16%
EBITDA210 219 302 185 257 +22%237 +8%383 +27%231 +25%
Net profit109 113 178 79 135 +24%108 −4%213 +20%120 +52%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹1,393 Cr Total
  • Plumbing Division ₹953 Cr 68.4%
  • Adhesive India Business ₹261 Cr 18.7%
  • Adhesive UK Business ₹96 Cr 6.9%
  • Paint Business ₹50 Cr 3.6%
  • Bathware Business ₹33 Cr 2.4%

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

high confidence
  • Capex ₹50 Cr this quarter · ₹300 Cr (FY26) planned
    • Kanpur plant building and machinery delivery
    • CPVC resin manufacturing plant (Astral's share) ₹120 Cr
    So, like this year we have guided around Rs. 300 crores kind of CAPEX because Kanpur plant building is ready. Now machinery delivery will start. The Q1 we will spend only Rs. 50 crores on the CAPEX. Next year, I think normal CAPEX will be there because we are not going to expand any capacity for next two, three years in the pipe category, so will be hardly any CAPEX. This Rs. 120 crores, yes, definitely it will be there, but that will be over a period of 12 months.
  • M&A Nexelon (CPVC resin manufacturing) Acquisition · Announced · Consideration ₹[object Object] (mixed)

    Backward integration to manufacture CPVC resin, grow volumes, and increase margins, ensuring quality consistency.

    Expected to improve EBITDA margins by 25-30% for CPVC, with a fast payback period and effectively zero investment due to working capital benefits.

    Now, coming to the acquisition of Nexelon and the question of the CPVC plant, we had been doing R&D for 3 years and I am very happy to announce that we have developed our in-house technology to manufacture CPVC resin along with technical assistance from our technical partner in the project. We are going to put up a 40,000 metric ton capacity that has a total investment of Rs. 150 crores where Astral share in the investment will be Rs. 120 crores for 80% equity.

Guidance & targets

Growth

  • Adhesive India Business Growth Growth · FY26 (four-month basis) · High confidence 15-16%
    As far as the adhesive business goes, the India business is performing good for us. We grew by 9% in the first quarter and with our July numbers, in the first four-month basis, we are close to our guidance of 15% to 16%.

    — Kairav Engineer

  • Paint Business Top-line Growth Growth · FY26 · High confidence minimum 20%
    and we are confident that in the coming time we are expecting the paint to deliver good number, at least 20% kind of top-line growth for the full year.

    — Hiranand Savlani

Margin

  • Adhesive India Business Margins Margin · FY26 · High confidence 14-16%
    Margins are within our guided limits of 14% to 16% in the adhesive business.

    — Kairav Engineer

  • Piping Business EBITDA Margin Margin · Annual basis · High confidence 16-18%
    We have always guided the investor community that we will try for the 16% to 18% EBITDA in the piping business. I think we will stick to our guidance of 16% to 18% for the annual basis.

    — Kairav Engineer

Capacity

  • CPVC Resin Manufacturing Capacity Capacity · High confidence 40,000 metric ton
    We are going to put up a 40,000 metric ton capacity that has a total investment of Rs. 150 crores where Astral share in the investment will be Rs. 120 crores for 80% equity.

    — Kairav Engineer

Timeline

  • CPVC Resin Plant Commissioning Timeline · Q2 FY27 · High confidence Q2 FY '27
    This plant will be commissioned by Q2 FY '27.

    — Kairav Engineer

Capex

  • FY26 CAPEX Capex · FY26 · High confidence around Rs. 300 crores
    So, like this year we have guided around Rs. 300 crores kind of CAPEX because Kanpur plant building is ready.

    — Hiranand Savlani

Market Share

  • Bathware Top-line Market Share · Coming years · Medium confidence Rs. 500-600 crore
    So, our first goal is to cross the Rs.500 crore top line in the Bathware business in the coming years, and to enter that club of being a manufacturer that does Rs.500 to Rs.600 crore of annual Bathware sale.

    — Kairav Engineer

Market context

  • Overall Volume Growth Volume · FY26 · High confidence double-digit
    Now it looks like the volume has started picking up July onwards and we are confident of a double-digit growth this year as per our initial guidance.

    — Kairav Engineer

What to watch in Q2 FY26

PVC Anti-Dumping Duty Announcement

next quarter
Current Expected in Q1 FY26
Target Announcement 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.

Risks & concerns

  • Low demand and government spending

    medium

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

    Volume was flat in Q1 due to low demand, early monsoon and low government spends.

    Management acknowledged

  • Polymer price volatility and inventory losses

    medium

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

    The biggest reason for drop was that is the inventory loss which all the industry players are suffering because of the drop in the polymer price which was in the tune of Rs. 25 crores kind of way.

    Management acknowledged

  • Challenges in integrating acquisitions and managing new businesses

    medium

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

    So, when you are buying a company, there is a lot of things, you have a legacy manpower, you have the different attitude of people working in the company that you have to change, lot of change management is there, you have to bring in your software's, you have to bring in, we run on SAP.

    Management acknowledged

  • Market volatility and difficulty in predicting future prices

    low

    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.

    I think it is very difficult to predict the balance nine months, because first quarter is over now. And balance nine months, when ADD is going to come, when BIS is going to come, when the polymer prices are going to go up, I think this is very difficult to predict this thing, because the market is volatile.

    Management acknowledged

Q&A highlights

7 direct
CPVC Resin Plant Margin Expansion and Capacity Sufficiency Direct
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

Volume Growth Outlook and Anti-Dumping Duty (ADD) Impact Direct
So, there are two things. One is that double digit can be anything. It could be 10 also, 12 also, 15 also, 20 also. There are many different parameters at play. ADD is not the only parameter. Once the ADD comes, price will settle at a certain level. After that, we need BIS for the price to even move further up, and also we need the government spending to increase in the system and we also need the building material segment as a whole, especially on the construction front, at the developer level, the demand should also go up.

Analysts probed the company's double-digit growth guidance given Q1 flatness and the potential upside from PVC ADD, highlighting the multiple factors influencing volume growth beyond just ADD.

Asked by Shravan Shah

ROE Decline and CAPEX Utilization Direct
The reason is that in last three years, if you see, we have spent close to about Rs. 1,500 crores of CAPEX. This Rs. 1,500 crores of CAPEX, unfortunately when we have spent at that time, the market scenario is not in our favor, because polymer is going down, because of that continuous pressure is coming on the realization side and the building material is passing through a challenging time. So, actual utilization of this Rs. 1,500 crores has not been there in the system.

An analyst challenged the consistent decline in ROE, prompting management to explain it as a consequence of significant CAPEX over the past three years coinciding with unfavorable market conditions and underutilization.

Asked by Sujit Jain

Demand Scenario and CPVC/PVC Procurement Strategy Direct
So, I will tell you on the demand side, basically, see demand side pan India demand definitely has not opened up. It is certain pockets and geographies are doing better, and certain pockets and geographies are still in the improvement space. ... So, we are confident of using different type of PVC grade as per our wish and desire and as per the market pricing to make our CPVC. So, we are not limited to a single PVC supplier for our CPVC plant.

The analyst sought clarity on the current demand environment and the company's procurement strategy for PVC and chlorine for the new CPVC plant, which is crucial for cost and quality control.

Asked by Sneha Talreja

Employee Expenses Increase Direct
So, Praveen, we have communicated earlier also that because of continuous falling polymer, the top line is getting eroded. So, because of that the percentage terms, it is going up. Absolute level, it is going very negligible. But percentage level it is showing very high, because we have entered into the multiple new businesses. So, because of that, we have to appoint the new people, not only on the ground level, but at the senior level also.

An analyst questioned the increase in employee expenses, leading to management explaining it as a temporary effect of new business expansion and top-line erosion due to polymer prices.

Asked by Praveen Sahay

Bathware Penetration and Profitability Direct
Not everyone is going to stop selling whatever they are selling and pick up my product overnight. That is why I am saying it takes years of conviction and convincing and customer preference building to succeed in the Bathware space. You look at all the other players, and you see, you make a list of all the companies in the Bathware space in India, you will only figure out that handful of companies have crossed the Rs.500 to Rs.600 crore top line level.

Analysts inquired about the penetration and profitability of the Bathware segment, prompting management to explain the long gestation period and conviction required for success in this B2C category.

Asked by Sunil Shah

Standardized Reporting for Acquisitions Direct
Yes, we can definitely work on that. That is not a problem well accepted. ... we will create a standardized format.

An analyst requested a standardized format for reporting sales growth, margins, cash conversion, and ROC for acquisitions, which management agreed to implement, indicating a commitment to transparency.

Asked by Sudeep Jain

3 min read 6 chapters

Detailed narrative

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.

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.

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.

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%.

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.

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.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls