Astral Limited — Q4 FY26 earnings call

Mr. Hiranand Savlani Speaks: "with first phase first phase we have to still be dependent on outside because first phase is not going to take care of our 100% requirement because CPVC is 40,000 15% to 17% compounding addition will be there. So, compound will be maybe 55 or sorry 15% more. So almost you can say 46,000 to 47,000 metric ton will be there and we have to also see how much utilization is taking place because end of the day it is a new plan for us. So first uh phase we have to be dependent on outsider also will not be taking care of our full requirement but one the second phase will be then we will be self-sufficient.

Clarifies the phased approach to CPVC backward integration, initial external dependence, and future self-sufficiency, which is critical for margin improvement.

Asked by Pravin from PL Capital

Mr. Sandeep Engineer Speaks: "at present for this fiscal there are also surprises coming globally it's better to keep some cash if certain opportunities come if polymer is on a higher cycle and we can get at a cheaper cycle or there is another as he said there are investment opportunities coming by the way of M&A or certain things where it makes sense for these four portfolios within these four we are not going to surprise you with something different there is something which can make give value and add value to the top and bottom line these all can be explored so at present this year whatever the addition things are there we'll be keeping the cash there on the books

Explains management's rationale for holding cash, indicating a strategic reserve for M&A opportunities and navigating market volatility rather than immediate deployment.

Mr. Kairav Engineer Speaks: "Channel inventory right now is all-time low. People who bought it in March, bought material in March have liquid, largely liquidated in April and in the first 15 days of May. And now as you see there have been two price rises in PVC and further PVC imports are being seen at a 10 to15 rupee gap also with the fact that you know duty is going to come back from the 1st of July. So restocking has started and we are seeing a good traction since the last 7 to 10 days. So hopefully this continues and you know we can try to deliver a decent volume number even in Q1.

Provides crucial insight into current inventory levels, recent price movements, and a positive outlook for Q1 sales driven by restocking and duty changes.

Asked by Keshav from HDFC Securities

Mr. Hiranand Savlani Speaks: "So this is the standard guidance which we are giving for since last four year that this is will be the trajectory but continuously we are delivering more. So you can account in your projection I don't deny that part but we are going to be conservative. The reason is very simple that we are working on a highly volatile environment.

Addresses the perceived conservatism in margin guidance, attributing it to the volatile polymer price environment and a strategy to under-promise and over-deliver.

Asked by Utkash from Anand Rathi

Mr. Hiranand Savlani Speaks: "So two things one we did lot of capex in last four year okay we have spent more than 1500 cr into the capex side... let me complete so we have spent a lot money into the capex side but our utilization is low because I told earlier also that our objective was to decentralize we could have hold that capex also because we were having the capacity but in spite of that also we spend money just to decentralize with the future vision that we want to grow the board market share that is why we spend money into the capex otherwise it was not needed so that was in a accounting say language I can say it was extra capex for also not needed also

Explains that lower return ratios are due to significant capex in recent years for decentralization and market share expansion, leading to temporary lower utilization, rather than operational inefficiency.

Asked by Namit Aurora from Ingrowth Capital

Mr. Hiranand Savlani Speaks: "So there were two reason why the asset turnover was low in the last 3 year. Number one that the polymer prices were continuously dropping. So because of that we were producing but we were not converting into the value growth. So that was one of the reason that the asset turnover was low. Otherwise in our industry motor you can consider 3 to 3.25 time asset term is easily doable. But we were almost in the range of 2 2.1 2.2 kind of level because the polymer were low. Secondly we were continuously not we were we are today also we are continuously on a expansion path. So what happened that before you utilize your previous capacity you are adding the new capacity.

Clarifies that low asset turnover in recent years was primarily due to polymer price deflation and continuous capacity expansion, rather than underutilization of existing assets, with an expectation of 3x asset turn in the future.

Asked by Nitin

Mr. Hiranand Savlani Speaks: "Yeah, definitely last couple of years the industry was passing through a big tough challenge but I think now to some extent it has improved and I think the big player have also given us some indication that they are also going to withdraw certain extra discount which they offer to the market and that is going to make the industry more healthy. So that is a very very positive things for the industry per se and particularly being a newcomer like astral which is a challenging brand for that category for them it is going to be a really big bonja.

Indicates an improving competitive landscape in the paints market, with larger players potentially reducing aggressive discounting, which is positive for Astral as a newcomer.