Astral Poly Technik Ltd Research ReportQ3

Astral’s Q3FY21 performance was better than our estimates on all front. This was led by strong pent demand in the piping segment from urban regions and a favourable base for adhesive segment. Consolidated revenue growth at 35% YoY was supported by ~33%, ~42% YoY growth in the piping and adhesive segments respectively. Standalone revenues (~77% of consolidated topline & mainly piping business) witnessed a notable growth of 33% led by ~15% volume growth. Besides, streamlining of distribution networks of adhesive business help drive consistent segment revenue growth (Q2FY21 was higher by 29%). This was also supported by launching of products along with dealer additions. The gross margin was down by ~154 basis mainly due to delay in price hikes and change in product mix. However, better operating leverage helped drive EBITDA margin up by ~360 bps YoY to ~21%. Management commentary suggests, a strong piping demand going forward supported by government thrust on Jal Jeevan Mission. That said, medium to long term piping segment volume growth for Astral is ~15%. This along with newly acquired water tank business would also start aiding to revenue growth from Q4FY21 onwards. The adhesive business revenue growth guidance at 20% would largely be supported by dealer expansion in new geographies. Company also sees long term EBITDA margin profile at 15%-16% Vs 9MFY21 EBITDA margin of 19%, with