Shares OF Pipe Maker Astral ltd Surges 2% to 1,410 as Brokerage Firm Investec has reiterated its 'Buy' recommendation on Astral Limited, setting a target price of ₹1,760 per share. The brokerage firm recently visited Astral's latest adhesives facility in Dahej, Gujarat, to assess its potential and impact on the company’s growth trajectory.
Key Highlights from Investec’s Analysis:
Expansion and Decentralization
Astral’s new plant, covering over 80,000 sq. meters, is currently manufacturing PVA (polyvinyl acetate), epoxy chemistries, and other adhesives. This strategic move helps the company in de-risking operations and decentralizing production, ensuring better efficiency and scalability.
Capex and Revenue Potential
The plant incurred a capital expenditure (capex) of ₹2 billion, and Investec estimates that it has the potential to generate ₹11-12 billion in annual revenue. This signals a strong return on investment for the company.
Growth Potential and Future Expansion
One of the most significant aspects of this new facility is its growth optionality. Astral is now positioned to expand into other chemistries, solvent cement, and paints with a modest capex, indicating a healthy return ratio profile. This move aligns with the company's broader diversification strategy.
Key Revenue Drivers
According to Astral’s management, the major revenue drivers from this expansion will be epoxy, epoxy putty, and solvent cement. These segments have witnessed strong demand, and Astral aims to capitalize on this growing market opportunity.
Investec's positive stance on Astral highlights the company's strategic expansion, cost efficiency, and revenue growth potential. With its well-planned investment in adhesives manufacturing and diversified product portfolio, Astral is well-positioned for sustained growth and profitability. Investors can take confidence in Investec’s ‘Buy’ recommendation, with a target price of ₹1,760.
Over the past year, Astral Limited's share price has experienced notable fluctuations. As of February 24, 2025, the stock was priced at ₹1,410 The 52-week high of ₹2,454.00 was reached on July 2, 2024, while the 52-week low of ₹1,306.55 occurred during the same period.
This data indicates a significant decline of approximately 43% from its peak in July 2024 to its current value in February 2025.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Investors are advised to conduct their own research or consult with a financial advisor before making any investment decisions.
