Astral Q2 FY27 Earnings Call: Guides Rs. 1,250 Crore FY27 EBITDA, Record October Demand

Broad-Based Revenue Growth, Margin Lag on Cost Pass-Through

• Consolidated Q2 FY 2026-2027 revenue of Rs.1,988 crore, +26% YoY (vs Rs.1,577 crore in Q2 FY 2025-2026); H1 FY 2026-2027 revenue of Rs.3,566 crore, +21.4% YoY.
• Q2 consolidated EBITDA of Rs.272 crore at 13.7% margin; H1 FY 2026-2027 EBITDA of Rs.516 crore at 14.5% margin.
• Plumbing revenue of Rs.1,398 crore (+25% YoY) in Q2 FY 2026-2027 with 16.3% EBITDA margin; Q2 volume growth of 19.10% was claimed as the highest in the industry.
• Adhesives India Rs.382 crore (+25.3%), Adhesives UK Rs.126 crore (+30%), Paints Rs.82 crore (+43.9%) in Q2 FY 2026-2027.
• Paints remained EBITDA-negative at ~-Rs.4 crore (~-5% margin) in Q2 FY 2026-2027; Adhesives India margin at 10-11% — both pressured by high-cost inventory with lagged price pass-through.
• Q2 per-kg margin was lower than Q1 — management attributed this to a PVC-heavy mix (unfavorable for CPVC) and at-times aggressive pricing to deliver its committed double-digit FY 2026-2027 growth.

Record October Demand and Industry-Leading Volume Growth

• Q2 FY 2026-2027 piping volume growth of 19.10% and H1 at 10.1%; management claimed the best margin and best volume growth in the entire piping industry for H1 FY 2026-2027 despite the ongoing war and volatile polymer prices.
• October (Q3 FY 2026-2027) saw "unprecedented demand" — the best October in Astral's history, especially in plumbing; management is hopeful of sustaining double-digit momentum into Q3 and Q4 FY 2026-2027.
• Full-year FY 2026-2027 volume target of 2,90,000-3,00,000 tonnes; management declined to commit between 10%/11%/12% growth but is working to exceed the 10% full-year guidance. Analysts flagged a high base: Q4 FY26 plumbing grew ~24% on price hikes and dealer inventory shift.
• Low trade inventories supported broad-based Q2 FY 2026-2027 demand after a negative Q1 FY 2026-2027 for the pipe industry; a September scheme skewed distributor purchases toward pipes over fittings, shifting fitting sales into October.
• Newer plumbing products — water tanks, valves, fire sprinklers, OPVC, PTMT, low-noise pipes — are delivering healthy margins off a low base; a complete PPR pipes-and-fittings range launched and an electrofusion HDPE drainage system launches shortly.
• Adhesive growth in Q2 FY 2026-2027 was sizably volume-led — double-digit on both volume and value with hardly any incremental price contribution, per CFO Hiranand Savlani; growth reflected market demand plus share gains in select geographies, supported by distribution expansion.

Adhesives and Paints Below Guidance; Recovery Roadmap into H2

• India adhesives H1 FY 2026-2027 EBITDA margin of 11.5% vs original FY 2026-2027 guidance of a minimum 14-15% — a shortfall of ~2.5%; CFO expects the year-end run rate closer to 13-14% and confirmed full-year FY 2026-2027 EBITDA margin around 13%.
• CMD Sandeep Engineer said the company will work harder to reach around 14% by FY 2026-2027 year end (over the next two quarters), citing crude behavior, softening of some raw materials, and in-house production of certain materials.
• UK adhesives at 6.3% EBITDA margin in Q2 FY 2026-2027 (H1: 5.6%); management is targeting a gradual build to ~9-10% and expects year-end FY 2026-2027 margins to return to normalcy.
• Paints: positive EBITDA of ~3-4% expected by FY 2026-2027 year end and 8-10% in FY 2027-2028 versus the 9-10% guidance; full-year FY 2026-2027 guidance retained at lower single-digit EBITDA. Crude unexpectedly touched 115-120, driving chemical cost pressure with pass-through at a lag.
• Paint legacy issues resolved — direct-to-dealer model, no bad debts, and the payment/collection cycle corrected from a legacy 4-5 months to 60 days; Engineer is "100% sure" the only remaining correction is achieving a positive margin.
• H1 FY 2026-2027 OpEx rose 19-20% YoY against 26% top-line growth; the CFO said operating costs are not expected to rise further in FY 2026-2027 and should decline QoQ in percentage terms, with Q3 FY 2026-2027 benefiting from October price pass-through.
• Key risk flagged: war-driven crude volatility — if it persists, margins can vary plus/minus (Savlani/Engineer).

Capex Harvest Phase; Flexible Brownfield Options

• Current plastic plumbing capacity is 425 KT per the press release — lower than the analyst's 500 KT assumption.
• Capacity additions will be flexible, not pre-committed — Kairav Engineer said Astral can ramp up in 1-2 quarters and add another 100 KT within 6-9 months if required (no specific FY committed), with enough land and building in place; options cited include the newly opened Kanpur plant and Hyderabad.
• Brownfield economics favor additions — 60-70% of capex cost is land and building, already in place, so a 100 KT brownfield addition will cost much less than greenfield, though it depends on product mix.
• Land acquired over the last 3 years is sufficient for the next 2-3 years of growth across pipes, chemicals/CPVC, paints and adhesives — enough to even triple capacities; capex from FY 2027-2028 onward will be at the lower end, with machinery the main spend.
• 1H FY 2026-2027 capex was Rs.260 crore (the balance of the ~Rs.318 crore 1H figure was acquisition-related goodwill); Astral expects ~Rs.400 crore of capex by year-end FY 2026-2027, including Rs.40 crore for the Naxalon CPVC plant not counted in the earlier Rs.300-350 crore guidance.
• CPVC backward integration on track — trials expected complete in the first month of Q4 FY 2026-2027 with commercial production readiness by the last month of Q4 FY 2026-2027; full capacity utilization within a maximum of 1 quarter post-commissioning.
• DSS (newly acquired specialty chemicals business): Q2 FY 2026-2027 revenue of Rs.53 million and EBITDA of Rs.8 million; expansion planned over FY 2027-2028–FY 2028-2029, with an adjacent running plant being acquired at effective cost, expected ready by FY 2026-2027 year end. Rs.50-52 crore expected from the sale of the Bangalore warehouse/office acquired via Jam Paints.

Inventory Inflated by Cost, Payables Deliberately Compressed

• Q2 FY 2026-2027 inventory days rose on inflation — continuous buying of higher-cost material; the published figure is point-in-time as of 30 September 2026 versus a normal average holding period of 55-60 days.
• No Q3 FY 2026-2027 inventory dent expected — PVC prices have risen, not fallen, since 30 September 2026; record-high October sales have already cut inventory meaningfully.
• Payable days fell on a deliberate decision to prepay dollar-related liabilities amid the war-like situation and to avail supplier discounts; H1 FY 2026-2027 saw no foreign-exchange losses despite sharp currency volatility (versus FX losses in the prior year). The CFO said this is environment-driven, not a long-term change — payable days should revert once currency normalcy returns (period unspecified).
• Realization was roughly Rs.190 in Q2 FY 2026-2027 (unit not specified) and is expected to exceed Rs.200 in Q3 FY 2026-2027, which management said will help absorb overheads faster.

FY27 EBITDA Path and H2-Weighted Seasonality

• ~Rs.1,250 crore total EBITDA projected for FY 2026-2027 — ~Rs.1,050 crore from plumbing plus Rs.200+ crore from chemicals (chemicals delivered Rs.90 crore in H1 FY 2026-2027), with favorable Q3-Q4 product mix expected.
• H2 seasonality supports the FY 2026-2027 path — FY 2025-2026 plumbing EBITDA of Rs.916 crore split ~40% H1 (Rs.369 crore) / ~60% H2 (Rs.547 crore); FY24 showed a similar 42-43% H1 / 56-57% H2 trend, and H2 is typically loaded with higher-margin CPVC and value-added products.
• Operating leverage is a H2 FY 2026-2027 tailwind — with fixed overheads constant and top line growing 10-15% faster than volume, overhead absorption should expand EBITDA percentage; FY 2026-2027 is the first year in three where value growth exceeds volume growth.
• ~15% EBITDA growth can "easily" be considered for FY 2027-2028 on the analyst's premise of ~Rs.1,250 crore FY 2026-2027 EBITDA (CFO Hiranand Savlani, responding to whether 15-20% was possible).
• Government trade action supports the pipes industry — management noted MIP implementation has taken place with a countervailing duty "on the card" and provisional measures already issued by the government; a polymer minimum base price of ~Rs.85-90 protects downside.
• Adhesives growth guidance upgraded — FY 2026-2027 growth will be "much higher" than prior guidance (India 15-20%, UK >10%) for both businesses, though no exact number was committed; most of the cost pass-through should be completed by year-end FY 2026-2027.
• Closing stance — Chairman Sandeep Engineer acknowledged challenging quarters but reaffirmed Astral's clear path of growth and margin delivery with no change to strategic direction; next updates committed with Q3 FY 2026-2027 results and again at FY 2026-2027 year end.