Earnings | Astral Limited (NSE:ASTRAL): Q3FY23 Results Out; Total Income rise 14% YoY

Astral Limited (NSE:ASTRAL) is a prominent manufacturer of Chlorinated Poly Vinyl Chloride (CPVC) and Poly Vinyl Chloride (PVC) plumbing systems for both residential and industrial use. The company has a dominant market share in the domestic CPVC and PVC pipe industry and has expanded into the adhesives and sealants segment, infrastructure products, and water tanks. The company operates several pipe manufacturing facilities across India, which produce a range of plumbing systems, drainage systems, agricultural pipes, industrial pipes, fire protection pipes, and electrical conduit pipes.

In Q3FY23, the company’s consolidated revenue grew by 15% YoY to INR 1267.8 crore, driven by a 28.6% YoY growth in the adhesive and paints segment to INR 336 crore, and an 11% YoY growth in the piping segment to INR 932 crore. The piping segment’s volume increased by 30% YoY, led by strong demand from the real estate sector. However, despite the revenue growth, the company’s EBITDA margin declined by 322 bps YoY to 14.7%, mainly due to inventory losses (~INR 25 crore in Q3) and low operating leverage. The usage of high-cost inventory and volatility in PVC prices resulted in inventory losses, leading to a sharp decline in gross margins by 152 bps YoY.

Moreover, the company’s PAT declined by 26% YoY to INR 95 crore, tracking lower EBITDA and higher interest & depreciation costs. Astral is the leader in the CPVC piping segment and is expanding into other building material businesses such as adhesive, paints, and sanitary ware. In FY22, piping and adhesive contributed 77% and 23%, respectively, to its topline. Despite these challenges, on a three-year basis, pipe revenue grew at a CAGR of approximately 23% led by a volume CAGR of 13.1%. The adhesive segment grew at a CAGR of approximately 21.5% supported by new product launches and the addition of dealer networks in new geographies.

In conclusion, Astral Ltd has witnessed strong revenue growth due to better volume offtake, mainly in the piping and adhesive segments. However, high cost inventories and low operating leverage impacted the EBITDA margin, resulting in lower PAT. Nevertheless, the company’s growth prospects remain strong, and it continues to expand its product portfolio and distribution networks.