Astral plumbing recovery and CPVC resin plant support margin-led growth

Investment View and Valuation

ICICI Securities, in its August 13, 2026 result update on Astral Ltd., retained its Buy recommendation and unchanged sum-of-the-parts-based target price of Rs 1,830. The brokerage’s thesis is centred on an expected recovery in plumbing demand, market-share gains, expansion into newer product categories and improving profitability.

ICICI Securities estimates revenue, EBITDA and PAT CAGR of approximately 14%, 18% and 26%, respectively, over FY26-FY28E. The target price implies about 58 times FY28E EPS.

Strong Q1FY27 Performance

Astral reported a strong Q1FY27, with consolidated revenue rising 16% year-on-year to Rs 1,578 crore. Plumbing revenue increased 10% to Rs 1,051 crore, while Paints and Adhesives revenue rose 30% to Rs 528 crore.

Plumbing volumes were broadly flat at 56,146 MT, comparing favourably with an approximately 10% decline in the industry. Plumbing EBITDA margin, including other income, rose 247 basis points to 18.9%, supported by better utilisation of the Kanpur and Hyderabad plants and a favourable mix towards higher-margin plumbing and value-added products. Paints and Adhesives EBITDA margin declined 54 basis points to 8.7%.

Plumbing Demand Recovery and Capacity Utilisation

Management retained FY27 guidance for double-digit plumbing volume growth and a 16-18% EBITDA margin. It indicated that demand recovered from May, with volumes growing approximately 40% in July and remaining in double digits in August. Channel inventory had normalised, July restocking was largely consumed by early August, and secondary and tertiary sales remained healthy.

CPVC volumes grew in the high single digits in Q1FY27, aided by plant decentralisation and market-share gains in newer regions. Demand was healthy across segments except agricultural products. Kanpur is operating at high utilisation and may be expanded, while Hyderabad is operating at approximately 50% utilisation.

Adhesives, Paints and Bathware Growth

Adhesives

India adhesives revenue grew 25% year-on-year to Rs 326 crore, supported by rural, online and export demand. India adhesives EBITDA margin moderated to 12.2% because of higher-cost inventory and elevated raw-material prices. Astral implemented a 7-8% price increase against a 15-16% rise in raw-material costs. Management expects margin recovery as raw-material prices soften and retained its approximately 15% EBITDA margin guidance.

UK adhesives revenue rose 26% to Rs 121 crore and EBITDA margin improved to 4.9%. Management retained its guidance for double-digit revenue growth and an 8-10% EBITDA margin.

Paints and Bathware

Paint revenue increased 49% to Rs 75 crore, with estimated volume growth of 35-40%. Growth was broad-based across six operating states and supported by new product launches. Capacity utilisation was approximately 60%, while Paint EBITDA turned positive at 0.1%. Management retained FY27 revenue-growth guidance of 20-25% with a low-single-digit EBITDA margin.

Bathware revenue grew 18% to Rs 29 crore and reached EBITDA break-even. Management expects a 20-25% CAGR over the next four to five years.

DSS Speciality Chemicals Acquisition

Newly acquired DSS Speciality Chemicals contributed Rs 7 crore of revenue and Rs 0.9 crore of EBITDA, representing a 12.9% margin, in its first consolidated quarter. Management expects the business to become a growth and margin contributor as volumes scale.

Capex and New Product Initiatives

Astral spent Rs 137 crore on capex in Q1FY27 and budgeted Rs 300-350 crore for FY27. The major expansion cycle is largely nearing completion. Debottlenecking raised Pipes and Fittings capacity to 4.21 lakh MT from 4.18 lakh MT.

The CPVC resin plant remains on track for completion by December, with trials and stabilisation expected in Q4FY27. The plant could provide supply-security and margin benefits. PEX-Aluminium-PEX trials are expected to conclude by September, with commercial production thereafter and contribution expected from Q3FY27.

Key Risks

• A sharp fall in PVC or CPVC resin prices.
• A slowdown in the agriculture, infrastructure or real-estate sectors.