Astral Q4 Review - Embedded Optionality Offers Valuation Comfort: ICICI Securities

Plastic PVC plumbing parts sit inside a new home under construction. (Photographer Tim Boyle/Bloomberg)

Astral Q4 Review - Embedded Optionality Offers Valuation Comfort: ICICI Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Besides the inherent growth prospects of both Astral Ltd.'s pipes and adhesive divisions (capable of delivering 15-20% revenue compound annual growth rate over next five years), the business model has embedded optionality which provides healthy comfort to otherwise seeming expensive valuations.

These include:

  1. Huge cash on books (to exceed Rs 10 billion by FY23) which would likely open up substantial organic/inorganic growth opportunities.

  2. Low market share in pipes (7.5%) and adhesives (3%) to drive substantial scalability over the next five years.

  3. Recently launched double wall corrugated pipes and tanks to drive sound revenue visibility.

Click on the attachment to read the full report:

ICICI Securities Astral Q4FY21 Results Update.pdf

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