Lower growth, lack of valuation comfort to weigh on pipes maker Astral

The stock of plastic pipes maker Astral slipped 4.6 per cent in trade on Monday due to margin pressures in the June quarter, growth concerns going forward, and expensive valuations. Given the profitability pressures and a cut in growth guidance across segments by the management, brokerages have lowered earnings estimates. The stock has been an underperformer over the past month, shedding 16 per cent during this period. Led by a 16.4 per cent improvement in the volumes of the plumbing segment, the company reported revenue growth of 7.8 per cent, which was marginally lower than what the brokerages had estimated. What further pulled down the overall performance was the weak contribution of the adhesives and paints segments. Plumbing revenue was up 8 per cent year-on-year (Y-o-Y) and was lower than Street estimates due to lower volume growth at 16 per cent, compared to 23 per cent in Q4FY24. The realisations were lower by 1 per cent on a sequential basis and 7 per cent over the year-ago quarter, as the company was unable to pass on the higher polyvinyl chloride (PVC) prices. Though plumbing volumes were in double digits, BOB Capital Market notes that this was lower than its nearest competitor, Supreme Industries (Supreme), for the tenth straight quarter.