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Astral Limited Q1FY22 Result Analysis and Conference Call Highlights

Astral Limited Q1FY22 Result Analysis and Conference Call Highlights

Published on 12 August 2021 Views 101 Comments 0

Q1FY22 Result Analysis

1) Q1FY22 Result

  • The Revenue from Operations of the company has reported growth of 73.3% YoY to Rs. 700 Cr. in Q1FY22 against Rs. 404 Cr. in Q1FY21. Sequentially, the revenue from operations of the company has gone down by 37.9% QoQ from Rs. 1,128 Cr. in Q4FY21.
  • The Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA) of the company has also reported a significant increase yearly of 143% from Rs. 53 Cr. in Q1FY21 to Rs. 129 Cr. in Q1FY22. The same has noted a fall of 49.2% QoQ from Rs. 254.5. in Q4FY21.
  • The EBITDA margin of the company stood at 18.5% in Q1FY22 against 13.2% and 22.6% in Q1FY21 and Q4FY21 respectively. The margin reported growth of 530 bps YoY and a downfall of 410 bps QoQ.
  • The Profit Before Tax (PBT) of the company has also shown robust growth yearly on account of a lower base of around 332% from Rs. 23 Cr. in Q1FY21 to Rs. 98.5 Cr. in Q1FY22. The PBT of the company was Rs. 229 Cr. in the previous quarter, which has now gone down by 56.9% in this quarter.
  • The Net Profit attributable to Owners has also witnessed a sharp rise in the figure of around 279% from Rs. 20 Cr. in the quarter ended 30th June 2020 to Rs. 74 Cr. in the quarter ended 30th June 2021.
  • The Net Profit Margin (NPM) of the company is 10.6% in Q1FY22 up by 580 bps YoY and down by 490 bps QoQ.

Astral Limited- Q1FY22 Result

Astral Limited- Q1FY22 Result

2) Segment-Wise Revenue:

  • The revenue from the Plastic segment of the company stands at Rs. 504 Cr. in Q1FY22 against Rs. 309 Cr. and 886 Cr. in Q1FY21 and Q4FY21 respectively. The revenue from this segment has increased from 62.9% YoY and decreased by 43.1% QoQ.
  • The Adhesives segment revenue has increased by 107.2% YoY from Rs. 95 Cr. in Q1FY21 to Rs. 196 Cr. in Q1FY22. Sequentially, the revenue from this segment has gone down by 18.8% from Rs. 241 Cr. in Q4FY21.
  • The contribution of Plastics Segment to the revenue mix of the company has gone down from 77% in Q1FY21 to 72% in Q1FY22. The EBIT Mix for the Plastic segment stands at 75% as of Q1FY22.
  • The contribution of Adhesives Segment to the revenue mix of the company has increased from 23% in Q1FY21 to 28% in Q1FY22. The EBIT Mix of Adhesives is 25% of the total as of June 2021.

Astral Limited- Segment-Wise Revenue 

Astral Limited- Segment-Wise Revenue 

3) Q1FY22 Highlights

  • The Company has commenced commercial production of plastic storage tanks at Ghiloth Plant (3rd plant) in July 2021. (Aurangabad and Gujarat were already in operations).
  • Construction of plastic storage tank plant at Hosur (4th plant) is going on with full swing, we are aiming to start production by November 2021.
  • The plastic storage tank has received a very encouraging response from our distributors(850+) and dealers(33,000+) community and once PAN INDIA availability will be there (By March 2022) we can see very good numbers from this segment also.
  • Valve Project will be completed in Q2 FY 2021-22.
  • Due to the second wave of Covid, the Odisha plant commencement is slightly delayed. Now instead of September 2021, it will start commercial production in November 2021.
  • PVC prices dropped very heavily (15% plus) in Q1 but now trying to stabilize and again due to supply constraints, some upward journey has commenced.
  • Demand scenario of the pipe, as well as adhesives, was affected heavily in May and the first half of June. But from the Last week of June onwards, both businesses have gained very fast momentum and we are seeing very encouraging sales numbers in both segments pipes and adhesives.
  • In July 2021 pipe sales have grown by 65% and adhesives by 36% in comparison to July 2020.
  • The proposed merger of subsidiaries Astral Biochem Private Limited and Resinova Chemie Limited with Astral Limited is pending with regulatory authorities for approval. We are expecting it will be completed by Q4 2021-22. We are working for the integration of two businesses and cross-selling synergies, once the merger will be completed we will start implementing the same.

Earnings Call Highlights:

Business Highlights:

  • As per management, it was able to grow its revenues by 63% & 110% YoY in the pipe and adhesives business. The company’s sales volume in the pipe business was up 13% YoY at 24,627MT, Adhesives utilization is ~40%-45%.
  • As per management demand scenario of pipes and adhesives was affected in May and the first half of June. From the last week of June onwards both businesses have gained momentum and are seeing very encouraging sales numbers in both segments pipes and adhesives. In July 2021 pipe sales have grown by 65% and adhesives by 36% in comparison to July 2020 and volume growth of ~18-19%. The company is even seeing a growth trajectory continuing in August.
  • As per management, EBITDA was impacted on a QoQ basis due to economies of scale being impacted as volumes were lower compared to the previous quarter therefore the company was not able to absorb the overhead cost, but the company was positive on a future trajectory as the company has maintained margins even though there is a drop-in PVC price.
  • PVC prices: As per management, PVC prices dropped very heavily +15% in Q1 but has now stabilized and due to supply constraint there is an upward trajectory seen.
  • The company has taken a price increase in CPVC in Q1 of 5%-7% and management guided that further price increase will be taken if required.

Capacity:

  • Management mentioned that they will be launching a revolutionary product by December.
  • The new product is to be launched in December 2021, which will have a common distribution network.
  • The company has commercial production of plastic storage tanks at Ghiloth plant in July 2021.
  • The plant is under construction for a plastic storage tank at Hosur and production is expected to start by November 2021.
  • The valve project is expected to be completed by Q2FY22.
  • Odisha plant commencement was delayed due to 2nd wave of covid and is expected to start production by November 2021.

Business Outlook:

  • Management mentioned that demand scenarios across all categories namely, industrials, plumbing, drainage, CPVC, adhesives, etc. have been strong, even rural and urban demand has seen good traction except certain areas of the south which is impacted due to Covid related restrictions. Management is confident to deliver double-digit growth.
  • Management mentioned that its long-term guidance for margins is around 16%-17%.
  • In the adhesives, segment management stated that it will focus on attaining its landmark guidance of Rs. 1000 Cr. topline and an EBITDA of more than 15%.
  • Improved operating leverage will help drive EBITDA margin going forward.
  • The Company has proposed merger of subsidiaries Astral Biochem Private Limited and Resinova Chemie Limited with Astral Limited is pending with regulatory authorities for approval. The company is expecting it to be completed by Q4FY22.
  • Increased demand of water tank revenue (currently Rs. 4 crores per month), the launch of the valve from Q3FY21, and capacity addition in Odisha will help drive demand for plumbing products.

 

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