Fundamental Wringer of Astral: Investors are unchangingly looking for companies that are gradual but resulting wealth creators. They slowly, but steadily recipe the investments as their earnings and net profits grow year-on-year. Their lack of volatility gives an investor peace of mind. In this article, we’ll self-mastery a fundamental wringer of one such similar visitor i.e. Astral Ltd., a consistent, wealth-generating stock, and find out whether it can be a good bet or not.

Fundamental Wringer of Astral

We’ll start off by getting a quick overview of the merchantry of Astral followed by a segment analysis. Next, we’ll learn well-nigh the industry landscape, the financials of the stock, and its future plans. A summary concludes the vendible at the end. So without remoter ado, let us jump in.

Company Overview

Astral Ltd. (popularly known as Astral Pipes) was set up in 1996 to manufacture drainage and plumbing products. Fast forward to the present date, it is one of the leading Indian real manor synchronous companies serving millions of households with its product offerings.

The visitor manufactures Chlorinated Poly Vinyl Chloride (CPVC) and Poly Vinyl Chloride (PVC) pipes, piping systems, and tanks for drainage, agriculture, fire protection, subscription protection, and other end uses. Additionally, it moreover makes adhesives and sealants. But that’s not all, Astral has moreover ventured into the paints, faucets, and sanitary ware product lines to tap their growing market in India.

The visitor owns 18 manufacturing facilities all over the world. Its strong workforce of over 6,000 employees serves customers wideness 25 countries. Its total domestic installed topics and UK & US installed topics stood at 3,36,686 MT and 31,632 MT at the end of FY22 respectively.

The pipe maker has a strong distribution network with 23 depots, 2,535 distributors, and 1,80,000 dealers.

We pretty much understand the merchantry and scale of operations of the visitor now. We’ll move forward to a quick segment wringer of Astral.

Segment Analysis

Product-wise Segments

The fittings, pipes, tanks, and other piping systems form part of the plastic division. The revenue share of the adhesives & sealants segment and the plastic segment has largely remained the same over the last six years.

The table unelevated presents the share (in percentage) of the two revenue segments of Astral Ltd.

However, a closer squint at the segment profits unelevated tells that the contribution of adhesives in the earnings of the visitor has come down. This is considering of the rise in the forfeit of raw materials used for manufacturing sealants & adhesives. The management expects margin resurgence for its smaller semester in the coming quarters.

Geographical Segments

The table unelevated highlights the share of geographical revenue segments of the visitor for the last two fiscals. ERROR

Industry Overview

For our industry overview of Astral, we’ll take a squint at the 3 sectors i.e. the pipes, tanks, and adhesives sectors separately. These are the three segments in which it primarily operates.

Pipes

The Indian plastic pipes market is pegged at Rs 30,000 crore with organized players executive 65% of the market. Talking well-nigh the industry segmentation, plumbing pipes used for residential and commercial real manor make up 50-55% of the total demand. The share of agricultural and infrastructure & industrial demand is 35% and 5-10% respectively.

The domestic plastic pipes market is projected to grow at a CAGR of 12-14% during the FY21 and FY25 period. The demand will primarily be led by the substitution of metal pipes, replacement demand, affordable housing, higher irrigation, and water supply & sanitation (WSS) demand.

Tanks

The water storage tanks market is Rs 4,500-5,000 crores worth, with unorganized players catering to a majority of 70% of the market. This is considering of the voluminous nature of the product which results in upper transportation costs.

However, the outlook for the organized market is strong as the companies are setting up manufacturing and distribution networks throughout the country.

Adhesives

The adhesives market in India was valued at Rs 13,400-13,600 crore in FY21. The industrial (B2B industries such as packaging, footwear, paints & automotive) and consumer (furniture, construction, arts, & electrical) are two sub-segments written for 40-42% and 58-60% of the market respectively.

The consumer adhesives market (worth Rs 5,300-5,500 crore in FY21), in which Astral operates is expected to expand at a CAGR of 9-10% during the FY21 and FY26 period.

Thanks for reading so far. We have covered the hardest parts of our fundamental wringer of Astral. In the sections ahead, we’ll race through the financials of the stock.

Astral – Financials

Revenue & Net Profit Growth

The operating revenues of the pipe manufacturer have grown at a CAGR of 12.85% to Rs 4,394 crore in FY22 over the last six years. The table unelevated shows the growing trend of the sales and net profits of Astral.

But the net profits have increased faster than the operating income. How? We wordplay this in the section on profit margins of our fundamental wringer of Astral.

Operating & Net Profit Margins

Despite thingamabob forfeit inflation in the last few years, the operating and net profit margins have expanded in the last six financial years. The figures unelevated show how the broadening of margins has aided the visitor to post largest bottom-line growth.

Debt/Equity & Interest Coverage

Speaking of the leverage of the company, Astral is scrutinizingly a debt-free stock with a minimal debt-to-equity ratio of 0.04 and a high-interest coverage ratio of 61.26. Its interest coverage has improved in recent years as the interest charges came down.

Return Ratios

Astral is an efficient and profitable merchantry with upper return ratios. The visitor reported unobjectionable RoCE and RoE of 30.28% and 23.29% in FY22 respectively.

However, RoE stuff lower than RoCE reflects that the management can increase earnings for shareholders by including leverage in the wanted mix.

The table unelevated presents the return on wanted employed (RoCE) and the return on probity (RoE) of Astral for the last five years.

Future Plans of Astral

So far we have only looked at the past years’ data for our fundamental wringer of Astral. In this section, we’ll try to get a sense of what lies superiority for the visitor and its shareholders.

1. Astral recently uninventive a majority 51% stake in Gem Pants for Rs 194 crore. This will mark a gradual entry of the visitor into the growing paints market in India.
2. In wing to this, with the recently launched faucets and sanitary product lines, the visitor plans to add Rs 1,500 crore to its revenues in the next few years.

Key Metrics of Astral

Let us now have a review of the key metrics of the stock.

In Conclusion

Astral’s focus on maintaining margins and staying a premium visitor has helped it to grow consistently. It has likewise delivered stellar profit growth. As the visitor braces for its new ventures, it will be interesting to closely follow the sales data of the paints and sanitary ware divisions in the coming quarters.

After going through our fundamental wringer of Astral, do you think the stock will be worldly-wise to unhook stellar returns in the future as well? It has given an impressive CAGR return of 32% every year in the last five years. How well-nigh you let us know in the comments below?

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