Astral sees healthy pipe demand as CPVC plant targets Q4 FY27 production

Investment View and Recommendation

ICICI Securities’ September 23, 2026 company update on Astral retains the broker’s BUY recommendation and estimates following a meeting with management. The broker’s conviction is based on healthy Q2 FY27-to-date pipe demand, continued adhesive traction, expected market-share gains during raw-material volatility and the planned commissioning of Astral’s CPVC resin plant in Q4 FY27.

ICICI Securities continues to like Astral’s strong brand, broad product portfolio, wide distribution network and robust balance sheet.

Pipe Demand and Market-Share Outlook

Management said pipe demand has been healthy in Q2 FY27-to-date, supported by favourable raw-material trends, normalisation of channel inventory after substantial Q1 FY27 destocking and healthy consumer offtake. Dealer restocking has not been excessive despite rising raw-material prices.

Management maintained its FY27 guidance for double-digit pipe-volume growth despite a weak Q1 FY27. It also expects larger organised players such as Astral to gain market share amid raw-material volatility. ICICI Securities forecasts pipe-volume CAGR of 10.7 per cent over FY26 to FY28E and plastic-pipe revenue CAGR of 12.8 per cent.

CPVC Resin Plant and Pipe Margins

Astral’s CPVC resin plant remains on track for commercial production in Q4 FY27. Management expects the plant to support pipe volumes and materially improve pipe-segment margins from FY28.

For the pipe business, management expects healthy Q2 margins due to rising PVC resin prices and operating leverage from higher volumes, while maintaining FY27 operating-margin guidance of 16 to 18 per cent. ICICI Securities estimates pipe EBITDA per kg of Rs 34.0 in FY27E and Rs 35.2 in FY28E.

Adhesives, Bathware and Paints

The India adhesives business continues to gain traction through wider distribution, geographical expansion and new chemistries. Management retained its FY27 revenue-growth guidance of 15 to 20 per cent for India adhesives, while Seal IT in the UK is also guided for double-digit revenue growth.

Raw-material volatility could temporarily affect India adhesive margins, although management expects margins to normalise when raw materials stabilise. Its FY27 India adhesive margin guidance remains 15 to 16 per cent. ICICI Securities forecasts blended adhesive revenue CAGR of 16.4 per cent over FY26 to FY28E and blended adhesive operating margin of 13.8 per cent in FY27E and 14.9 per cent in FY28E.

Bathware and paints are also scaling up, with management targeting revenue growth of 25 to 30 per cent in each segment in FY27.

PVC Prices and Channel Inventory

The broker believes higher PVC prices, caused by international prices, higher ocean freight and government measures including a minimum import price and restoration of basic customs duty in July 2026, have normalised channel inventories.

Prolonged elevated PVC prices could favour organised players because their balance sheets can fund higher working-capital needs. Conversely, an abrupt PVC-price decline after the rally could create inventory losses, although ICICI Securities believes larger players are better able to absorb them.

Financial Outlook

The broker expects EBITDA and PAT CAGRs of 18.9 per cent and 30.3 per cent, respectively, over FY26 to FY28E, with FY28E return on equity of 18.6 per cent.

Valuation and Target Price

The Rs 1,831 target price, increased from Rs 1,783 by rolling forward to September 2027E, is based on sum-of-the-parts valuation.

Key Downside Risks

• A housing slowdown.
• Sharp PVC-price declines and resulting inventory losses.
• Higher adhesive raw-material prices.
• More intense pipe competition.
• Failure to commercialise the CPVC resin plant.