Astral gains pipes market share as CPVC capacity supports margin recovery

Investment View and Valuation

Motilal Oswal Financial Services reiterates its Buy rating on Astral and raises its target price to Rs 1,697, valuing the stock at about 48 times FY28E price-to-earnings. The broker considers Astral's performance industry-leading despite a weak demand environment for plastic pipes in Q1 FY27.

At the prevailing valuation of about 41 times FY28E price-to-earnings, Motilal Oswal believes the stock already broadly reflects its expectations for improving financial performance.

Q1 FY27 Financial Performance

Astral reported year-on-year revenue, EBITDA and PAT growth of 16 per cent, 25 per cent and 48 per cent, respectively, in Q1 FY27. However, the reported results were 5 per cent to 13 per cent below Motilal Oswal's estimates.

Astral had a cash balance of Rs 4,700 million at the end of June 2026.

Pipes Business Gains Market Share

The plastic pipe industry faced weak Q1 demand amid volatility and a downward trend in polymer prices. Industry volume is estimated to have declined 10 per cent year-on-year. Against this backdrop, Astral's pipe volume was flat, which Motilal Oswal describes as the best performance among peers and an indication of continued market-share gains.

Higher pipe realisations drove 10 per cent year-on-year growth in pipes revenue, while pipe EBITDA margin remained strong at 18.9 per cent. Bathware revenue increased 18.1 per cent year-on-year.

Adhesives, Joinery and Paints

India adhesives revenue rose about 25 per cent year-on-year, with an EBITDA margin of 12.2 per cent. Overseas adhesives revenue increased 26 per cent year-on-year and EBITDA margin was 4.9 per cent; the broker noted a healthy recovery in the overseas business.

Astral expanded its network into more than 8,000 towns and added 500 dealers, taking its dealer base to over 1,500. The joinery business has established a presence across eight states and has shown encouraging early traction. Management is focused on portfolio expansion, deeper woodworking penetration and innovation-led differentiation.

Paints revenue grew 48.7 per cent year-on-year, with EBITDA at break-even. The paints business operates in six states and has capacity utilisation of 60 per cent.

Management Outlook for FY27

Management said pipe volume surged in July 2026 and retained its FY27 guidance for double-digit volume growth and more than 20 per cent value growth. Channel restocking has begun as polymer prices rise.

Management expects current high realisations to continue in the following quarter, supported by a reversal in PVC prices in Q2 and implementation of the minimum import price, which should protect PVC floor prices. It also expects strong adhesives and paints growth to sustain, with adhesives margins expanding as raw-material inflation is fully passed through.

Capacity Expansion and New Products

Astral plans FY27 capital expenditure of about Rs 3,000 million. Phase 1 of its 40,000-ton CPVC resin plant is progressing towards trial runs in Q4 FY27. Management expects the plant to support market-share gains and margin recovery.

OPVC, PPR and other new products are also scaling up rapidly.

Growth Estimates and Forecast Changes

Motilal Oswal estimates revenue, EBITDA and adjusted PAT CAGR of 16 per cent, 22 per cent and 30 per cent, respectively, over FY26 to FY28. This compares with revenue, EBITDA and adjusted PAT CAGR of 16 per cent, 11 per cent and 7 per cent, respectively, over FY21 to FY26.

The broker forecasts FY28E return on equity of about 18 per cent and pre-tax return on capital employed of about 26 per cent.

Following Q1 FY27, Motilal Oswal reduced its FY27E revenue, EBITDA and PAT estimates by 1 per cent, 3 per cent and 2 per cent, respectively. It raised its FY28E revenue, EBITDA and PAT estimates by 1 per cent, 3 per cent and 8 per cent, respectively.