Lower growth, lack of valuation comfort to weigh on Astral

The stock of plastic pipes maker Astral slipped over 9 per cent since August 8 (results announced) to 1,888.60 on the BSE due to margin pressures in the June quarter (Q1FY25), growth concerns going ahead, and expensive valuations.

- RAM PRASAD SAHU

Given the profitability pressures and cut in growth guidance across segments by the management, brokerages lowered earnings estimates. The stock has been an underperformer over the last month and has shed nearly 17 per cent during this period.

Led by a 16.4 per cent improvement in volumes of the plumbing segment, the company reported revenue growth of 7.8 per cent which was marginally lower than what the brokerages had estimated. What further pulled down the overall show was the weak contribution of the adhesives and paints segments.

Plumbing revenue was up 8 per cent year-on-year (Y-o-Y) and was lower than Street estimates on account of lower volume growth at 16 per cent while it had registered a growth of 23 per cent in Q4FY24. The realisations were lower by 1 per cent on a sequential basis and 7 per cent over the yearago quarter as the company was not able to pass on the higher polyvinyl chloride or PVC prices.