Astral Q1 results: Brokerages unimpressed as stock gets ‘hold’ and ‘reduce’ ratings

Brokerages were largely unimpressed with Astral’s Q1 results and downgraded the stock owing to worse-than-expected margin performance, but they raised the target price citing a strong demand outlook.

Astral’s shares were down 0.77 percent, trading at Rs 1959 at 11:55 am on August 14.

Incred Equities downgraded the stock to ‘Hold’ from ‘Buy’ while raising the target price to Rs 2002 from Rs 1978. The analyst noted that there is a “need to enter the stock at a lower price” and explained the target price raise to strong demand complemented by capacity expansion. Astral plans to add 185 kt plumbing product’s capacity expansion over FY24-26. In management guidance, it keeps expectations at 15 percent CAGR for revenue for the next 3 years.

The consolidated EBITDA missed the estimates by 5-7.5 percent as the company registered lower margins in its business segments. “The plumbing division’s inventory loss, lower fixed-cost absorption for bathware and sub-par adhesive margin in the global business (UK/US) led to a lower consolidated margin vs. our estimate” said the brokerage.
Antique Stock Broking maintained their ‘Hold’ rating and revised the target price to Rs 1930 from Rs 1550 as the company registered good volume growth in agriculture and drainage segments. The brokerage attributed the lower margins to mixed deterioration.

Centrum Broking downgraded the stock to ‘Reduce’ while raising the target price to Rs 1717 from Rs 1649 as the brokerage attributed the stock’s 28 percent surge in the last three months and said the stock has priced in the growth.

Astral announced its quarterly results on August 11 with net sales rising by 5.79 percent year-on-year to Rs 1,283.10 crore. Net profit increased by 34.76 percent YoY to Rs 119.80 crore while EBITDA was up 16.71 percent to Rs 213.70 crore. The company had delivered returns of 38.03 percent in the last six months.

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