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Informist, Tuesday, Aug. 12, 2025

By Shakshi Jain and Akash Mandal

NEW DELHI/MUMBAI – After incurring a capital expenditure of around INR 15 billion in the last three years, pipes and adhesives manufacturer Astral Ltd. is hoping to reap the benefits in terms of improved capacity utilisation and placing further capex aims on hold for the next two to three years, a top company executive said in a post-earnings analyst conference call Tuesday. 

"This Rs. 1,500 crores of capex (INR 15 billion), unfortunately, when we have spent at that time, the market scenario is not in our favour because polymer is going down because of that continuous pressure is coming on the realisation side and the building material is passing through a challenging time. So actual utilisation of this Rs. 1,500 crores has not been there in the system. Now in next coming 2-3 years time, you will see capex will be on hold and the utilisation will improve," the company's management said.

For the ongoing financial year, the company's management said Astral was sticking to its earlier-stated capex guidance of INR 3.0 billion to INR 3.5 billion. Of this, INR 500 million was incurred in the June quarter. Over the next 12 months, the company plans to invest INR 1.2 billion towards setting up a chlorinated polyvinyl chloride resin unit with a production capacity of 40,000 tonnes. The total project cost is estimated at INR 1.5 billion, of which 20% will be incurred by Astral's technical partner. The plant is expected to be commissioned in Jul-Sept quarter of FY27.

"This is now the second step in our backward journey. By doing this, we will be able to grow our volumes and increase our margins at the same time," the company management said.

In a filing with exchanges Monday, Astral had said its board had approved the proposal to acquire 80% stake in Nexelon Chem Pvt. Ltd. for up to INR 1.20 billion for the purpose of manufacturing chlorinated polyvinyl chloride resin which is a major raw material for the company.

"...When there is a narrow gap between CPVC (chlorinated polyvinyl chloride) and PVC, at that time normally the CPVC volume pick up. Because now today if you see the CPVC and PVC price gap is narrowed down. So there is high probability that there will be a conversion of many consumers from PVC to CPVC. That is going to increase the volume for the industry in a big way in the coming time," the management said.

Astral's plant in Uttar Pradesh's Kanpur is expected to start production in a phased manner from the December quarter, the company management said. 

NEW BUSINESSES

In terms of financial performance, Astral is confident of clocking a double-digit growth in the ongoing financial year. It will be helped by the company's growing new businesses, as per the management. The company expects a minimum of 20% growth in its paints business this fiscal. Meanwhile, in the bathware category, the order book is growing quarter-on-quarter, as per the management. Going forward, the company's endeavour will be to prioritise volume growth over margins, as per the management.

In the company's UK business, which is on a recovery path, Astral sees margins settling between 8% to 10% over time.

For the June quarter, Astral reported a consolidated net profit of INR 811.0 million, down nearly 33% on year and almost 55% sequentially. Its consolidated revenue from operations declined at a slower pace of 2% on year and 19% sequentially to INR 13.61 billion during the three months.

"During the quarter, polymer prices were volatile," the company said in a statement, adding that the average polyvinyl chloride prices in Apr-Jun fell nearly 14% on year, resulting in inventory losses and an impact on realisations. However, in the ongoing quarter, the company does not foresee any inventory losses, the management said.

In Apr-Jun, the company's pipes business was negatively impacted by low demand, early arrival of monsoon and low infrastructural spend by the government, as per the management. However, in the ongoing month, the company said volumes are picking up even though a uniform pan-India recovery in demand is missing. "...Pan India demand definitely has not opened up...certain pockets and geographies are doing better and certain pockets and geographies are still in the improvement stage," the management said. Astral expects demand to improve following the initial festive period, staring the third week of August.

Tuesday, shares of the company ended at INR 1,269.30 on the National Stock Exchange, down 8.1% from Monday's close.  End

Edited by Akul Nishant Akhoury

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