Astral Shares Fall 7.5% as Q1FY26 Results Disappoint Investors

On Tuesday, the Astral shares fell 7.5 percent, touching a day’s low price of Rs 1,278 on NSE after Astral Limited’s Q1FY26 results painted a challenging picture, with the company navigating a subdued operating environment marked by continued volatility in polymer prices, especially PVC, and persistent demand headwinds. Consolidated revenue slipped 1.6 percent year-on-year to Rs 1,361 crore, compared to Rs 1,384 crore in Q1FY25, reflecting a slow start to the fiscal year. The operating profit (EBITDA) declined by 14 percent to Rs 185 crore, while the net profit tumbled 34.16 percent to Rs 79 crore. The sharp drop had missed estimates by some analysts, triggering a fall in the share price. Margins were squeezed, with the EBITDA margin falling by 195 basis points to 13.6 percent versus last year’s 15.5 percent.

Management attributed the lacklustre profitability to a 14 percent year-on-year decline in average PVC prices, compounded by a further 4 to 5 percent sequential drop during the quarter. These price movements led to inventory losses and weaker realisations across the company’s core segments. Astral mentioned that the June-quarter market conditions were tough but observed a stabilising trend in PVC prices since July, which they expect will improve to a gradual recovery in demand and margins in the subsequent quarters. Jefferies maintained a “hold” rating for a target price of Rs 1,565 per share, and Morgan Stanley maintained an “equal-weight” rating of Rs 1,489 per share on Astral.

Despite these near-term challenges, Astral’s bathware division stood out with impressive growth, and sales soared 27.4 percent to Rs 33.3 crore year-on-year. The adhesives business in India grew 9.2 percent, maintaining a robust EBITDA margin of 14 percent, while the paint segment sustained its momentum, posting 20.7 percent top-line growth with margins relatively thin at 1.4 percent. The company’s UK adhesives business expanded by 7.1 percent, but margins came under pressure after accounting for forex losses. In contrast, the essential plumbing division, which constitutes the bulk of Astral’s business, reported lacklustre volumes and margin erosion due to weak realisations.

Astral made key strategic moves to fortify its long-term competitive positioning. During Q1FY26, the company completed the acquisition of 100 percent equity in Al-Aziz Plastics Private Limited for Rs 33 crore, bolstering its fittings and accessories offerings. Additionally, Astral signed an agreement to acquire an 80 percent stake in Nexelon Chem Private Limited, targeting commercial production of CPVC resin by Q2FY27, a major vertical integration play aimed at improving supply chain reliability and reducing raw material costs. Production capacity for plumbing increased to 3,87,501 M.T. from 3,81,957 M.T., reflecting ongoing capacity expansion initiatives.

Management had forecast double-digit volume growth in plumbing and targeted EBITDA margins of 16 to 18 percent for pipes and 14 to 16 percent for adhesives. Astral is progressing with two new adhesive facilities at Dahej and further expansions at Kanpur and Hyderabad, supporting the company’s ambition to broaden its value-added product lines.