A slowdown in government spending amid elections over the past few quarters led to liquidity issues and a drop in infrastructure-related demand, impacting the building materials sector. However, with government payments resuming, demand is expected to revive.
As infrastructure activity picks up, driven by renewed government focus and funding, Astral is likely to benefit given its augmented capacity. It recently commissioned three plants each at Bhubaneswar, Guwahati, and Hyderabad. While capacity utilisation is currently low, the ongoing expansion of the dealer and distributor network is expected to ramp it up. Additionally, these plants will reduce logistics costs, thereby boosting profitability.
The company was able to retain operating margin before depreciation and amortisation (EBITDA) despite lower product prices. According to the company management, this was achieved by the growth in value-added products. “When the polymer price was down by 18%, we were still able to maintain our EBITDA margin, mainly because of this value addition,” the company stated during an analyst call after declaring the quarterly result.
The company’s EBITDA margin fell a tad to 16.9% in FY25 from 17% in FY24. Revenue increased 3.4% to Rs 5,832 crore in FY25 while its net profit declined 4.9% to Rs 519 crore.
Astral has made significant capital investments over the past two to three years, though the benefits of that spending are yet to be realised. According to the management, capex typically precedes returns, which usually take a few years to materialise.“Astral remains our preferred pick amongst our building material products universe given its superior product mix, extensive distribution network and healthy balance sheet,” noted IDBI Capital in a report. The brokerage has, however, cut the FY26 and FY27 earnings estimates by 6.5% and 7.7% amid muted March 2025 quarter performance while reducing the target price to Rs 1,800 from the earlier target of Rs 1,948. Shares of Astral rose 0.2% to Rs1,504.4 on Monday on the BSE.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
