Analyst Concall
Astral expects volumes, financials to normalise by Mar-end
This story was originally published at 22:05 IST on 7 November 2024
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--Astral: Expect input cost prices to go up further
--CONTEXT: Astral management comments in post-earnings analyst call
--Astral: Expect growth in volumes, financials to return to normal Oct-Mar
--Astral: Expect margins to improve by Mar 31
--Astral: To launch 12-13 new products in US Oct-Mar
--Astral: Marketing expenses impacting margin growth
--Astral: Overseas ops, paints division facing margin pressure
--Astral: Working to improve UK business, margins
--Astral: Expect volume growth of 10-15% FY25 on better monsoon
--Astral: Expect paints division to report higher volume growth FY26
--Astral: Growth to normalise Oct-Mar on back of anti-dumping duty on PVC
--Astral: Manpower cost high Jul-Sept due to commissioning of new plants
--Astral: To focus on marketing to improve UK sales
By Narayana Krishna and Jahanvi Kothari
MUMBAI/HYDERABAD - After witnessing flat sales and a fall in its net profit in Jul-Sept, Astral Ltd. is expecting financials to normalise by March-end aided by volume growth and traction in its other business divisions, the company's management said in a post-earnings conference call Thursday. Lower demand for some product segments and higher input costs impacted the company's performance in the latest quarter, it said.
Astral's management said the company expects an overall volume growth of 10-15% for 2024-25 (Apr-Mar) aided by better monsoon across regions. The company said the extended monsoon in the past quarter slowed construction activities in the country, affecting its sales.
The pipe and adhesives maker reported a consolidated net profit of INR 1.1 billion in the September quarter, down 16.2% on year and 8.6% sequentially. The consolidated top line of the company for Jul-Sept was INR 13.7 billion, up 0.54% on year, the lowest on-year growth in at least 17 quarters.
Addition of new capacities, including the company's expansion in Hyderabad, and corrective measures taken to improve its business in the UK, are also likely to aid the company in restoring growth.
The company said it plans to take some steps on the marketing side to improve its UK sales, adding that its marketing expense had impacted its margins in the latest quarter. The company has launched 12-13 new products in the US, of which some have hit the market while the rest will arrive in the coming two quarters. This, it said, is expected to improve its margins in 2024-25 (Apr-Mar).
The sales of the company were also impacted by high input costs and manpower costs due to commissioning of new plants, it said. However, it expects the financials to normalise in the next two quarters or by the Apr-Jun quarter of FY26. The company's employee benefits expense was INR 1.3 billion in the September quarter, up 22% from INR 1.1 billion a year ago. Astral launched operations in Rajasthan, Karnataka, and in some parts of Maharashtra, due to which the company's paints business is expected to report better volume growth in FY26.
The company said its inventories had sharply gone down as distributors and dealers did not want to stock up due to low demand during Diwali. This was coupled by the extended monsoon season in the latest quarter. The prices of polyvinyl chloride have inched higher due to the anti-dumping policy announced by the government, and it could go higher, the company said.
On Thursday, shares of the company closed at INR 1,790.35 on the National Stock Exchange, down 0.8%. End
Edited by Tanima Banerjee
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