According to brokerage house Edelweiss, Astral’s Q2FY22 numbers were stronger than consensus forecasts led by 20% YoY volumes in pipes and 37% year-on-year growth in adhesives. The shares of Astral Limited have been multibagger stock By increasing by about 135% in a year.
The brokerage said, “We believe that Astral continues to be a major beneficiary of the shift towards CPVC pipes given the firm market and higher PVC prices. In addition, product launches such as sanitaryware, tanks, infra pipes and more The areas have high growth potential.” one note.
The company’s consistent market share gains and strong cash flows are driving down its premium valuation. According to Edelweiss, Astral maintained strong growth in the first half of FY22: Volume growth is the best among peers: Supreme Industries suffered a decline in volumes, followed by Finolex and Prince Pipes. In addition, Astral remains net cash positive, it highlighted.
“Being growth-focused, Astral continues to focus on launches (recently entering sanitaryware, tanks, etc.), capacity additions, and branding and distribution additions (constant efforts). This is a key to market consolidation. is also a beneficiary, thereby giving a boost to the market. Share profit in Plastic Pipes & Fittings (visible in the current quarter),” the note added.
Management is confident of strong demand 10 billion in FY22 while margins are likely to improve from Q3FY22 itself as Astral has made substantial price increases to pass the input cost. In addition, seeing growth opportunities, Astral launched two new products during the quarter: BONDTITE PRO and Resiwood WPC-FIX.
Despite the uncertainty, management is confident of seeing double-digit volume growth (seen in October). Edelweiss said they also looked extremely positive at the opportunity in the infra pipe and plastic tank segment, and are planning to launch DWV pipes in December.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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