Astral (NSE:ASTRAL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to ASTRAL Limited Q2 and FY 'twenty seven Earnings Conference Call hosted by Equity Securities Private Limited. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinion, and expectation of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask question after the presentation conclude. Please note that this conference is being recorded. I now hand the conference over to mister Pranam Mehta from Aqiri Securities Thank you, and over to you, Ranu.

0:47 Thanks, Danish. Good evening, everyone, and thank you for joining this call. From the management side, we have with us mister Sandeep engineer, chairman and managing director Mr. Hiranan Saulani, ED and CFO Mr. Kairav Engineer, Executive Director and Mr. Soumya Engineer, CEO at the sales and team division. I will now hand over the call to Sandeep Saru for his opening remarks. Over to you, sir. I welcome all to the earnings call of Q2 FY 'twenty seven and the first half year results of FY 'twenty seven for the Astral business. As you are all aware, the polymer industry is passing through a volatile time.

1:34 The prices are highly volatile and fluctuating, but due to the implementation of MIP, we feel that now at least the downward side is protected and the industry will benefit from this. I'm very happy to share that this quarter was very good quarter for the industry demand, was good across the board. The reason was that Q1 was very negative for the pipe industry and the grade was sitting on a very low inventory, which supported all round demand. We at Astral always focused on profitability, volume growth and market share gains, which we have once again demonstrated in this quarter with a 19.10% volume growth and 10.1 volume growth for H1.

2:24 This is not only the highest in the industry, but also comes with a very healthy EBITDA margin of 17.4% in H1 against the company's guidance of double digit volume growth and 16% to 18% margin. This clearly suggests that Astral has continuously Astral has been continuously gaining market share for many years, and this certainly will continue. Now let me take you through all our verticals. Plumbing, demand was overall good in the industry and so was the demand for Astral. But because of the decentralization of the plant, our demand was very good and because we are gaining market share in new geographies where we have started new plants.

3:10 As you are aware, Astral has spent sizable amount of CapEx in last four to five years across all verticals, and now it is the time to utilize the same and generate cash flows from thereon. As communicated in the past, we have increased our product basket in last three to four years. And since it's base since its base is still low, we are delivering good performance in products like water tech, valves, fire sprinkler, OPVC, PTMT, our various low noise pipe segments, and we have also come and we have also launched a complete range of PPR pipes and fittings and also electro fusion HDP drainage system is going to be launched very shortly.

4:03 And these all these new segments have been giving us healthy margin. The major thing, the construction of CPAC plant is almost complete. The machinery installation is going on. It is as per schedule, but some of the things are going early than the schedules, and we are expecting to complete all our trials in the first month of Q4, and we'll be commercially ready with the CPVC production by the last month of Q4. Our state of art machines for the new value added products, PEX aluminum PEX has been installed, stabilized and now it's starting its commercial production.

4:48 And in Q3, it will be in this quarter, Pax aluminum Pax will be commercially sold from ASTRAL from its own plant and from its own product basket. Apart from there, I think going forward also, would like to clearly give a guidance that the month for the last month and this month has been a robust demand for the piping segment, and we expect our growth at that robust pace to continue and deliver a healthy margin in this quarter. Bathware, the bathware business is also picking up and more and more new projects and developers are being added to Astral plant.

5:33 During this quarter, we have given a healthy growth of 26.8%. Adhesive business. This quarter was once again excellent for Adhesive business in India and overseas. We have delivered a robust growth of 25.330.10%, respectively. We are getting a good response in the rural and online business from all our product line and all of these segments. And at the same time, overseas business is also picking up very well. I'm sure you must have seen that in this vertical, we are continuously growing our market share by entering new geographies, introducing new products and focusing on rural and overseas market.

6:23 During the quarter, margins were under pressure due to high cost inventories and pass through is taking place with a lag effect, and there were certain schemes and things which were devised and been announced, which were have been corrected and the pass throughs have taken place. So once again, the pass through is complete or the raw material prices will start declining looking to the crude prices and improving. And we assure you, and we are very much conscious about bringing this EBITDA margin back to the normal level in this quarter. And by the end of this fiscal year, again, to the margins of 1314% or up to 15%.

7:09 So we are all consciously working there. The last month shown a positive growth, a very good growth as well as a very good improvement in the margins. And the same is continuing for this month. The other business in U. K, this business has started delivering growth and positive EBITDA, which we had promised that there were certain corrections to be done, which have done, and so we are now getting a positive EBITDA margin compared to last year. This quarter, we have achieved a robust growth of 30.1%, which with an EBITDA margin of 6.30%. We feel that this business is now slowly coming back to track. And by the year end, we are also will deliver the guided margin for the U. K. Business.

7:59 You can see from the numbers of UK business that H1, we have delivered a robust growth of 28.1% and with an EBITDA of 5.6%. The pain this quarter once again saw a robust growth of 39.9, following 48.7% for the first quarter. Yes, there are concerns about paint business, and we assure you that by this year end, the margins in the EBITDA will show a very positive growth. The paint business has delivered robust growth from last six from the six operatives. All the states have been giving past. In are percent. And the new progress launches are also getting a good response. We have are working on these geographies for the new launches and increasing our product range.

9:03 Due to geographical situation, crude prices and higher sites, the most of and higher site, most of the chemicals derivatives of crude and the pressure continued on the margins, but even we have taken improvements in the paint business in this quarter at various places, right, from our team improvements to the margin improvements, and we are sure that it is going to grow at a fast pace and improve on the margins very fast. We are in line with the industry as passing through the prices also and... But everything in these two businesses that doesn't change especially is happening at the. ESS, the newly acquired specialty company. This quarter, ESS has generated a good revenue of INR 53,000,000 and EBITDA of INR 8,000,000.

9:58 Two, though its base is very low, we are undertaking an expansion plan for which the plans have been laid out. The expansion plan will happen into next one or two years, and which will be ready by the year end because we are getting a very good running next to us at a very effective cost and level where we can now scale up the production, add new products, and we can increase the revenue very fast. After that, we will see a jump in revenue margins because the introduction of new products and economies of the scale because these products will replace lot of the products which we import and use in our business, paid business as well as we will able to sell these products to Indian market export and also keep on developing new chemistries, which are almost ready, and we are about to make them one by one in this new business.

10:59 With this, I think I am closing my initial remarks, and I'll let Hiranyam give you the financial performance of Q2 and the outlook of the rest of the year, and we will be all available to answer your questions. Thank you very much. Good evening, everyone. Sorry for the hosting delay code because the Chorus was full of the schedule, so we got only the eight p. M. Call. So we are extremely sorry to trouble all of you in the late hour. So once again, welcome to the Q2 earnings. The results are in front of you and press release are with you. So I want to only highlight the key numbers vertical wise for the Q2. In this Q2, plumbing business had delivered INR $13.98 crore, again the last year similar quarter, INR $11.18 crore. So 25% kind of growth is there. Adhesive business had delivered INR $3.82 crore versus last year, INR $30.05 crore, so 25.3% growth.

12:02 Adhesive U. K. This year has delivered INR 126 crore, again the last year INR 97 crore, so 30% kind of growth. Paid business delivered INR 82 crore this quarter versus last year, 57 crores, so a growth of 43.9%. On a consolidated basis, this quarter, $19.88 crore versus last year, $15.77 crores, so a overall growth of 26%. On H1 wages, if you see, the plumbing business had delivered INR 2,448 crores versus last year, INR 2,072 crores, so 18% growth. Adhesive India business, $70.08 crores versus INR $5.66 crore last year, so 25% growth.

12:49 Adhesive UK has delivered INR $2.47 crore versus last year, INR 192 crores, so 28% growth. Paint business, first half INR 162 crores versus last year, 107 crores, so 51% growth. And consolidated growth for the company is INR 3,566 crores versus last year, INR 2,938 crore. So overall, on a consolidated basis, we have delivered a 21.4% growth. Now coming to the margin side. In Q2, the plumbing business had delivered INR $2.27 crore of EBITDA, so 16.3%. Adhesive business India operation is INR 42 crore, so 11% kind of margin.

13:36 Adhesive UK, INR 7.9 crore, so 6.3% EBITDA margin. Paint business, negative 4 crore, so roughly about negative 5%. Consolidated INR $2.72 crore, INR so 13.7% EBITDA margin. On a half yearly basis, plumbing business, $4.26 crore, 17.4% adhesive India INR 81 crore, so 11.5%, adhesive UK, INR 13.8 crore, 5.6 crore and the paint business, 4 crore negative, roughly about 2.5% and consolidated INR $5.16 crore, 14.5%.

14:27 So as you all know that we already we are already believing in the consistency of number and the profitable growth for the organization. I'm very happy to share that in this quarter as well, we again delivered a very healthy volume growth as well as the value growth also. In both the vertical, pipe and material vertical and adhesive and the paint vertical also. The overall consolidated growth was roughly about 26% and the margin was 13.7%. We are happy to share that we have given guidance of double digit volume growth in the plumbing vertical. And if you see the number, in H1, we have delivered 10.1%. So we are already delivered in a difficult quarter, double digit growth. So we are quite confident that the second half will be even much more than the what we have delivered in the H1.

15:21 Similarly, if you see the margin side also, we have given a guidance of 16% to 18% EBITDA. Again, that we are on the higher side of 17.4% EBITDA in H1. So we are very well within our guided zone. And you must be knowing from the so many years number, even if you see the last year number also that our first half plumbing business normally delivered 40% of EBITDA. So last year, if you see out of INR $9.16 crore EBITDA, which we have delivered in the full year, where the first half was INR $3.69 crore and the second half was INR $5.47 crore. So it is forty-sixty ratio was there. We are expecting the similar kind of growth. So we will be easily doing close to about INR $10.50 crore kind of EBITDA in the full year basis. Similarly, in the ASU also, some pressure was there on the margin front, which I think Sandeep has already explained that there is just pressure on the cost, which we are slowly and gradually passing on to the industry, but it is passing on with some lag effect. So that's why there is a pressure on the margin. But still, we are confident that by year end, most of the pass through will take place. And the way yesterday outcome has come for the elections and all and the crude have started falling, which has given us the positive sign. And if the chemical start falling, then it is going to give us a big advantage in Q3 as well as the Q4.

16:51 In '5, one of the good thing has happened for the industry is that the implementation of MIP has taken place. And now the even the countervailing duty is also there on the card and provisional things are already issued by the government. So this is a very, very good things for the industry that we were struggling for last two, three years, the downward trend of the polymer. Now it is with this close to about INR 85, INR 90 kind of minimum base price will be there. So downside is very much protected. That is going to give us a big support. And at the same time, dealer and distributor will also be happy to hold the inventory whenever there is a price coming to that kind of zone. So they will not wait for the further poll also. Secondly, I want to highlight that since realizations are improving due to higher polymer price, and we are confident that the margin in the second half will be better as most of the Q2 cost inflation has already been passed through in Q3 beginning. So October, I think most of the price rise we have taken in the PVC also.

17:57 And in the CPVC also, we have taken the price rise. So most of the price rise is passed through in the industry. So Q3 will also be a good margin because most of the things is already passed through. As communicated, Sandeep, by we are slowly getting back to the growth path in our U. K. Business. And as guided in the last phone call and the numbers are in front of you, we are continuously growing fast. The top line is growing at a 30% kind of run rate, and the EBITDA is also improving. This quarter also, we have delivered close to about 6.3% EBITDA. Our new product contribution will start from this quarter itself, like PEX, aluminum PEX, HDP, PPRP, electrofusion 15. All this contribution will start coming, so that will help us to improve our top line as well as the bottom line.

18:44 So in nutshell, I can say, overall, the industry environment is very positive. Across all the vertical, we are gaining the market share. So we are highly confident that in the second half also, we will be delivering much better number than what we have delivered in the first half. With this, I want to conclude my initial remarks and opening the floor for the Q and A. Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

19:40 First question comes from the line of with Dollar Capital. Please go ahead. Hi, sir. A couple of questions you have already highlighted in terms of the we are looking at a better growth in the second half, but just wanted more clarity there. So particularly first on the plumbing side, so you highlighted that the October, the last time the Diwali was there and in October, low base. So just wanted to see broadly in terms of where the growth would be. It would be a a kind of a high teens kind of a number that we we have seen in the October. Because in the q four f r twenty six, because of the the price hike and the inventory shifted from company to dealers, we were having the significant growth 24 odd percent.

20:30 So in that base, also, are we confident that we should be doing that we have already saved 10%, but what's the possibility to to reach to 12, 13%? Is there a possibility or 10% for the full year? That's the... Where we will be looking at. At. So so good evening, Sravan. I'll answer your question. First question is regarding October. I think October, we saw unprecedented demand and the sale has been very good. I think it is the best October that we have had in the history of ASTRAL in terms of all the product. Especially plumbing side, I cannot say this volume number on on the call because you will take it as a benchmark, but it is unprecedented type growth that we have seen in the month of October. So we are very hopeful that we will continue our double digit momentum into q three and also into q four.

21:24 Now whether we will deliver 10% or 11% or 12%, that that still is to be seen. But ideally, you know, we are targeting anywhere full year basis anywhere between, you can say, two lakh 90,000 to three lakh ton type of total volume number. So I want to add, I think we are targeting not that 10, 11, 12, but we'll be working for more, but we don't want to specify the number. But looking to the product lines, the the new plans, the geography distribution addition, because we are adding multiple distributors also, we feel that there is a robust growth going to come in these two quarters. It.

22:11 Second, in terms of the... We have mentioned that the price hike, which was... The cost increase was there in September, which we passed on in the October, in in the plumbing particularly and the CPVC. So if you can highlight it broadly how much in terms of the percentage So, Shrivand, we have taken we have taken 5% hike in CPVC in the month of October. And PVC, we have taken all the price rises till date. Okay? Whatever price rises have happened, we have covered all the price rises. And looking, you know, looking at the... You may say, think that the margin profile in the q two is... Or k g is lower than q one, but you have to understand that product mix is more favorable for us in q three and q four.

22:57 So I think things are moving in the right track. We have nothing to worry about. Q3 will again be a very robust quarter. Secondly, I can add that we always request every investor that look our number from a full year basis rather than on a particular quarter basis. Even if you see the first half basis also, I think margins are well in the higher zone. We have guided 16% to 18%, and we are sitting on 17.4%. So I don't think that there is a pressure on the margin also because sometime pass through take place with little lag here and there. So because of that particular month or particular quarter, number plus minus can happen. But a yearly basis, we are quite confident that whatever we have given the guidance, we are going to deliver on that.

23:46 Great. Great. And, sir, given that the... This part, India, particularly 25% growth in the one h. So last time we were saying that for full year 15, 20%. So... And then similar way, UK also for 28%, and we were looking at more than 10%. So is there any upgrade in the guidance for both India and UK at this stage? So definitely, there will be upgrade in both the businesses because the cost pressure is there. So because of their realizations are also improving, but at the same time, part is that the volume is also equally growing fast. So definitely, there will be an upper side, much upper side, I can say, rather than what 15% we have given. We are not giving you exact number that we will be delivering 20, 25, how much. But definitely, whatever we will deliver, we are going to try to maintain that kind of momentum. So again, the guidance definitely number will be much higher.

24:42 But I think if Saumiya is there on the line, he has joined from Singapore. He's he's there on a vacation, but he's joined from Singapore. I think on the broader base, let him also comment on these two business growth prospects of this coming two quarters. Tom, you can add to it. Yeah. No. I think overall, Q3 and Q4 will be, as Hiranbe said, we'll be seeing good top line growth for sure. And guidance as of now what Gandhi said, I think we'll try to maintain the Q1, Q2 run rate in terms of the top line growth. So we are penetrating the business well. We are gaining the market share in adhesive business for sure.

25:31 Bottom line is we said when we started the call to all of you that it is an improvement area for us. So we'll be working very heavily on that in terms of any corrections we can take in terms of our costs or putting price increases if required in the market in certain products where we hold significant strong position in certain retail markets. And also, let's see what correction comes. I think Q3, we are seeing some raw material getting softer in Q3, Q4, hopefully, for the chemicals. So that will also have an added value overall in terms of our margins for q three, q four. So overall, it doesn't look like too much of a stressful situation, and we'll address it very positively in q three and q four.

26:29 And as and when DSS also starts gearing up and adding value to the overall head of your business, I think that is going to be a very good backward integration for the business. So both India and UK in terms of margin, definitely, whatever we have done, eleven point five and five point six in the one eight should be should be improving in the second half. Yeah. It will it will it will gradually improve moving into q three, q four as per what we mentioned when we started the call. Last on the CapEx front, sir, we we have already done 318 odd crore in the one h, but we were looking at $303.50 odd crore for this year.

27:15 So even last three, four times, we said that now the CapEx will be on the lower side, and we will be sweating the assets. But since that the CapEx is still happening, so how we look at this year, next year in terms of the CapEx? So I think CapEx in the first half, you have done INR $2.60 crore rupees. And the balance portion is, I think, goodwill related because of acquisitions and all. So I think what we have given the guidance and secondly, this with this CapEx also, INR 40 crore is related to the Nexalone, which is the our CPVC plant also. So we have not considered that at INR 300 crores, INR $3.50 crores. So I think all put together, I think by year end, we should be completing around INR 400 crores kind of CapEx.

28:02 But at the other end, we have our already the warehouse and the big office in Bangalore, which we got from the acquisition of Jampence, which was put on store, has been now sold, and we'll be getting around INR 50 around INR 50 plus, 51 crores, INR 52 crores from the sale of that asset back as in the capital. Okay. Thank you, sir, and all the best and happy Deepavali. Thank you. Same to Thank you. Our next question comes from the line of Ritesh Shah with Investec. Please go ahead. Hi, sir. Answer the opportunity, couple of questions.

28:48 First, if you could please touch upon increase in inventory days. Likewise, there is a decline in pay per days. And specifically with respect to inventory, if you could also possibly indicate what is the average holding cost of PVC and CPVC that will help. The reason to ask is after the decline in crude, we do understand the MIP is there. But if, say, hypothetically, MIP is $85.86 rupees, could there be some probability of an inventory dent in Q3 if the PVC price is correct? I'm just trying to understand that. That's the first question. I think, Ritesh, inventory days have gone up mainly because the inflationary environment.

29:37 Because of that, you continuously you have to buy the higher cost material. So because of that and the it's the average of material. That's why sometime days and particularly, secondly, days are reflected on a particular day on September 30. We normally consider the average days of holding, which is normally in the range of fifty five to sixty days. But from these numbers are always on a particular day of September 30. But otherwise, on an average, we hold fifty five to sixty days. Secondly, PVC price has gone up after this number because we have published this number on September 30. And after that, the PVC price has gone up. So it has not gone down. So there is no reason that we believe that there will be a dent on the inventory.

30:23 So far, there is no reduction on the PVC pipe. Even if in future, suppose the PVC price has to come down. So by that time, we will be sizably reducing our inventory. I think has already clearly communicated that history high sale we have done in the month of October. So sizable inventory, we already cut. So my number of days will not be what is published in the September date. Now regarding your payment day, I think last year, we had some foreign exchange related losses. So this time, management has taken a call that dollar related liabilities looking to the war kind of situation. We have to reduce and try to see that we pay off early and take that advantage of discount or whatever available from the supplier. And that is the reason you can see in the first half, there is no foreign currency related loss in spite of having so much of fluctuation in the currency.

31:18 So because of that, days have come down. But once I think things will stabilize, payable days can again go up also. Sure. This is helpful. My second question is, if you look at the history of the company, Q2 has always been stronger than Q1. And partly it's because of operating leverage, partly it's also on back of the mix. To what we understand, the mix gets better as we move from Q1 to Q4. So I think, Karav, it allude to the point that product mix will be actually better in Q3, which we appreciate. But just wanted to understand what exactly happened from Q1 to Q2, given we also have the benefits of operating leverage. Now to deliver that double digit growth, sometimes you have to be aggressive in your pricing also, and sometimes product mix is also changed.

32:16 Now if you look at the entire piping industry, if you consider H1, we have delivered the best margin and we have delivered the best volume growth. And that too in terms in in a scenario where there is a war going on, where the polymers and additives and all prices are volatile, where there are supply issues. So I I don't think that, you know, one needs to really look into it on a quarterly basis. On a full yearly basis, again, as I said, I am retail... Reiterating. We will deliver close to about thousand 50 type EBITDA in this business because it is the q three and q four that are going to be favorable in the product mix. Secondly, what we did, I just want to clarify what Karol say that this INR $10.50 crore we are projecting EBITDA that is only for the plumbing business, not the chemical or the adhesive or the paint. That will be INR 200 plus crore because in the first half itself, if you see chemical business also, we have delivered INR 90 crore kind of EBITDA. And even if the same level of things will be maintained, then also we will be INR 180 crores, 200 crores. Definitely now price pass through is taking place and some benefit of the chemical price reduction will take place. So then definitely 200 plus will be there. So on a full year, pages twelve fifty kind of EBITDA we are projecting for the full year. And you see the last year number also last year also

33:47 the similar trend was there. Sir, I'm I'm with you. I'm completely with you on full year numbers. I'm just trying to understand what exactly changed on a sequential basis on a product basis. Basically, nothing changed. Nothing changed. Changed. Changed. The industry was in a severe degrowth environment in q one. And everyone was covering up the volume in q two, and everyone was passing the price rise at a lag effect. So... And it is a quarter that is not particularly favorable for the CPVC product. So it is going to be a PVC heavy quarter, and the price rises were being passed at a lag effect by everyone because everyone was trying to gain the market share and cut their volume. So similarly, we were also doing. So there is there is nothing, you know, wrong in what has happened. It is just that that was a business call that we have to take. And secondly, Ritesh, one thing was also there that in the September, what scheme we run to cut the volume, the advantage taken by the distributor was more of the piping side than the fitting side.

34:47 So what happened that the ratio pipe was much higher than the normal ratio, which we used to work. So because of that, the fitting sale come down in the month of September, particularly on the CPVC, which reflected in the month of October. That's why October is the extraordinary number because the fitting sale took place in the month of October. Because last month, the steam was designed in such a manner that the most of the distributor purchased the pipe. So that also product mix also to some extent affected our margin. But that is going to happen in the industry because one per month, some scheme will be there, some scheme will be there. So I think that loss, whatever was there, we already covered up in the month of October. And question comes from the line of Keshav Lahouti with HDFC Securities. Please go ahead.

35:47 Hi, thank you for the opportunity. Firstly, congratulation on industry leading growth in H1. My question is we have seen, you know, some slowdown in volume in Q2, whether the ASTRAL remains confident to deliver industry leading growth in FY twenty seven? I think so far, you see last three, four years, we are continuously delivering the excellent number. Okay. So there is no reason to believe that we will not be able to deliver. We are quite confident. And now with the way CapEx we have done and we opened up a multiple plan and now a lot of new product launches is going to happen. So these all are suggesting that we will definitely going to deliver the industry leading growth. Understood. Got it. So whether there has been any vendor gain in this quarter? No. Because, actually, their pass through was not taken place. Otherwise, definitely could have been there.

36:39 Understood. Got it. And what is the other thing I'm paying to, you know, guided margin for this year, India as well as UK? I think India, we guided 14, 15% normal EBITDA we are delivering. But in h one, it is 11.5% kind of we will deliver. So we are short by two and a half percent kind of guidance. But we are of the view that because this industry passed through taking place with the leg. And particularly, if you see that whatever we are passing on to the market, then the further price rises definitely. Like nobody expected that the crude will touch 115,120 kind of level. So because of that, the fluctuation is wide. So if somewhere it will settle down, I don't know what level it will settle down, maybe 190 or 85, I don't know. But it is somewhere it will settle down, and then I think the pass through will take place fully.

37:30 And then the margin will be coming back to the normalcy of 14%, 15% kind of level. UK, we already said that we are slowly and gradually going to deliver by year end. Our target is to reach somewhere around 9% kind to 10% kind of level. I think we are going into that direction. Like in Q2, we were 6.3% kind of EBITDA. So hopefully, we are positive on that side also. And there also, the same problem is going on. In spite of that, we are in a positive side of EBITDA. Pass through is taking place with some lay. But hopefully, there also we will be coming out from that problem. We are in margin will be coming back to the normalcy. We have started making corrections in both the businesses, and we are very conscious, and we are going through everything where we may...

38:18 Can get corrections and margins back. So we are confident the improvement is continuously going to happen this quarter and next quarter, and we have to stabilize, and we'll be going back to our guided numbers very well by the year end. Yeah. One last question from my side. I understand, you know, the things are quite volatile. So when should we expect, you know, profitability to kick in in paint business and possibly you guided nine to 10% margin for paint? When when is that expected? Paint, we have guided nine to 10, and we are sure that by this year end, we'll be positive EBITDA around three to 4%. And by next year, I think we should be anywhere between eight, nine, and 10%. But the volume wise, they've been looking at a very fast pace. So a lot of these expenses which we are doing on manpower, warehousing, deliveries in last year compared to last year, these have started coming down heavily, and we'll see more improvement in these two quarters, especially even this last month and this month, there's a very, very robust growth we have got on things.

39:26 And we are targeting to keep the run rate of growth at 40 plus, 40, 45, 50%, which is will be a very good run rate on growth, getting market segment, getting more customers and getting more market share. At the same time, the improvement on the margin will be done very severely in this coming quarter. Okay. And just one last question, what are the levers of margin improvements, like minus five to 10%? What the what things you're factoring in? Is it more like cost or more like revenue? Things are there. One thing, if if you see the q one, we were already at the breakeven. Yes. So, again, the cost inflation came in because of that, the situation changed, I think. So if the volatility will end, definitely what Sandeep may say that even in the beginning of the year also, we have communicated that we will be a lower single digit EBITDA for the full year basis.

40:28 And that is what we are communicating now also. But what happened that the volatility is so sharp in the market because of this work situation. If somewhere it will be stabilized, then definitely we are confident because now growth rate is very high, 40% plus growth we are working. So because of that, overhead absorption will take place very fast. And next year, again, we are... If we target around 25% kind of growth, then I'm sure the cost will not going to go up so high. But economy of scale will give you the extra margin. And then by the time all this pass through will take place. So bringing back to that level, I don't think this is going to be a big challenge. But again, it depend on the market situation. If, again, that these kind of volatile utility will continue, then plus minus 10.

41:17 Secondly, I'd like to tell everyone very clearly that we have come out of all the legacy issues which we got from the gym. Our collection cycle is excellent. We are direct to dealer. We are getting no bad debts now. Collect cycle is very strict. All our collections, which in the past legacy were four months, five months as is varies, have been completely corrected, and we are getting our payment cycle has come down to sixty days, and which is a very good payment cycle for the paint business. So all these legacy issues would take our time to make corrections in this new acquired business. But now the way the business is growing and the cycles are moving, I'm 100% sure that the only correction we need is to have a positive market EBITDA.

42:14 Got it. Thank you for such a detail, Mr. Panish. Thank you. You. Ladies and gentlemen, anyone who wishes to ask a question may press star and 1. Our next question comes from the line of Praveen Sahai with PL Capital. Please go ahead. Yes. Hi, sir. Thank you for opportunity. My first question is related to the Adhesive. Surely, like 25% of our revenue growth you have delivered, it's quite strong. Can you give some particular context on the under it's related to the underlying demand or just the markets you are gaining because of that such kind of revenue growth is coming, one? Second is is that largely volume rate or it's a price led largely?

43:05 So, Somya, can you reply this? Yeah. I think it is market demand also. And at the same time, I think select geographies where I would say we have been weak predominantly, and now we are, you know, slowly and gradually kind of building a basis there and, you know, expanding on those distribution networks and all those things. So I think it is a mix of both. I wouldn't just say it is is it is mainly market share gain because market's also growing and, you know, other other competitors are also growing. So I think it is a mix of both, but definitely, you know, in terms of our volume and value, it is both in double digit, and volume is also, you know, up there matching our value growth percentages.

44:04 Okay. So it's largely a volume led growth you are seeing? Yeah. Praveen, more of value... More of this volume led, value will be hardly any additional thing, but sizably on the volume side. Right. Secondly, one data point. Is it possible to sell the sanitary ware at water, like, we break in or still in the losses? See, it is very difficult now for us to work out the separate for the sanitary ware because the reason is that that it is a part of the plumbing and the sizable products of plumbing division is manufactured in the same plant. So it is difficult to arrive, but you consider it will be a very, very negligible kind of positive EBITDA. So breakeven plus something.

44:53 Right. Thank you, and all the best. Thank you very much. Thank you. Next question comes from the line of Sneha with Wealth Management. Please go ahead. Thanks a lot for the opportunity. Just couple of questions from my end. Sir, you alluded around $11.50 odd crores of EBITDA this particular year for the plumbing division. If my math is correct, you also mentioned about around two lakh 90,000 tons of volume. So the first time, the way I would want to look at it will be around 40,000. Or even if I would want to look at it as in terms of revenues, which I just, you know, multiplied by current utilization, margins would actually come out to be around twenty twenty one odd percent. So just wanted to understand, will your volume be a beat versus what we are expecting, or there will be substantial improvement in margins?

45:43 That's what. And in case we've already started to see that in the month of October, while you said, you know, it's happening with lag, Have we seen EBITDA margin improvement in the month of October itself? That's the first one, sir. We have seen a sizable improvement into the EBITDA in October. Secondly, I already communicated in the beginning that pass through whatever was there, the substantial price right took place in the month of September for the polymer has taken place in the month of October. So that has also supported us in the higher EBITDA margin in the month of October. But I'm not considering only one month. We are considering the next six months. And these are all our seasonal months. And I am telling you this because of the history. If you see the last year number also, the ratio was sixty-forty only. So 40% in the first half and second half was 60%.

46:34 If you see last year, $9.16 crore rupees of EBITDA, which we generated in plumbing business, INR $3.69 crore we generated in H1 and thus H2, we generated INR $5.47. So it is a trend. Even in previous year also, if you see FY '24 also, the similar kind of trend is there, '42, forty three forty three percent kind of EBITDA was generated in h one and fifty six to 57% EBITDA generated in second half. So probably it is a train. Secondly, you you are tracking company for so many years. So I'm sure you must be aware that the second half is loaded with more of CPVC and the value added product than the first half. First half is always loaded with more of the PVC front. So the margins are much better in the value added product and the CPVC.

47:21 So that also support us. Thirdly, whatever the expenses which we wanted to incur to start this multiple plant, the CapEx which we have done sizably, the economy of scale advantage was not available to us because the volumes were not there. Now volumes have started picking up and the utilization level is going up, plus inflationary environment is there. So that is also going to help us. Now suppose my top line is growing 10, 15% higher than the volume, then the overhead absorption will be better in our favor. My cost is fixed overhead is going to remain same, but in percentage term, my EBITDA will shoot up Because my top line is going faster than the volume. And in the presentation of analyst meet also in the last quarter, phone call also, we communicated that this is the first year we are seeing after three years that the value growth is higher than the volume growth. And that is going to help us to absorb our overhead. So all these things are favorable in our side, and that is going to contribute us in the second half.

48:21 Exactly per kg and all, have not done the calculation, but definitely tomorrow you can call me, we will do the I will share with that working with you. Understood, sir. So second was, I know it's too early, But if you're expecting around $12.50 odd crores of EBITDA in FY twenty seven, how do we... How should we just look at the EBITDA growth for next year? Can it be 15, 20 odd percent? I think, yeah, you can consider that kind of 15% kind of growth easily you can consider. Understood. That's it from me. So that's what the. Thanks thanks a lot, team. All the best. Thank you. Thanks. Next question. Yes, Mr. Shukla, please proceed ahead with the question.

49:20 Mr. Ramesh, thanks for the opportunity. The question has already been answered. So nothing from my side. Thank you. Thank you. Our next question comes from the line of Tejas Pradhan with Citigroup. Please go ahead. Yeah. Hi. In terms of the plastic funding capacity, correct me if I'm wrong, our current capacity would be around 500 kt? No. I think we have given the press release our capacity 400. Four twenty five or four twenty five? It is four twenty five. 04/25. Okay. So in terms of then capacity additions for FY '8, right, so add, say, 300 Kt of volumes for FY 'twenty seven will be at the higher end of utilization that we have operated historically, right? So what is the quantum of capacity you're looking to add into next year?

50:18 So, basically, we have the enough land available with us and enough building available with us. And we can add capacity at a short notice because the machinery lead time is not much. So if need be, we will take a call as and when needed. You know, we are not going to, you know, work and think too much in advance. We have the spaces available for us. So whenever we want to ramp up, it is only a matter of one or two quarters to ramp. So, like, we open up the Kanpur plant there. We can add the more capacity. We can add the capacity in Hyderabad also. We can add the other plants also. So bay... Basically, in short, I can say that we have enough land and building available that if you want to add another 100 KT, we can do it in a matter of, you know, six to nine months.

51:06 Okay. And what would be the CapEx requirement for, let's say, 100 KT of capacity addition given that it will be brownfield? Depends on the product mix, actually. But, you know, since since majority in in any CapEx, you know, now 60, 70% of the cost is land and building. That is already there. So incremental cost to add this 100 KT will not be as much as you know setting up a greenfield expansion. I can tell you one more thing about these which we have done. In the last three years, we have had enough land for all the growth for next two to three years for all the businesses, whether it is the business of the pipe business or the tomorrow the chemical business or the chemical CPVC plant. We have enough plan even to triple the capacities and all or whether it's the paint business or whether it's the adhesive business.

52:03 And we have also added few... A our main main spaces for putting the machinery. So coming years, the CapEx will be in a lower end, especially with the land being acquired, which is a costly asset now. Most buildings being built, which are again cost affairs now and the machinery addition would be the main thing which will go ahead in the year. Understood. And lastly, on the CPVC backward integration project, once it gets commissioned, say, in the fourth quarter, what would be the typical ramp up time for the full capacity utilization? I I think I I think maximum one quarter it will take.

52:51 Okay. Understood. That's it from my side. Okay. Thank you. Thank you. You. Anyone who wishes to ask a question may press star and 1. Next question comes from the line of Rahul Agarwal with A. K. A. Asset. Most questions got answered, but just referring to what Ritesh was discussing on working capital. So, you know, your decision of not incurring, you know, ForEx stocks and making vendor payments quicker, is this more of a long term decision, or is it just based on current environment? No. That is based on the current environment. Because right now, the rupee was sharply depreciating. So we took a call that we don't want to call unnecessary fall under that trapping because very difficult to predict the current status. We are not that expert to predict that currency.

53:45 So because of that, we decided that whatever price it is coming to us, we have to pass on accordingly to the market. So better in this environment to avoid the currency risk. Otherwise, I think when the normalcy will come back, then I think, again, better payment days will be the similar level only. What was there earlier. Got it, sir. And secondly, Hirava, you mentioned on overheads and, you know, our own understanding was that last two, three years, there has been quite a bit of OpEx you have incurred, which incrementally should actually, you know, not increase with that level. But even when I look at first even when I look at first half, their OpEx is still increasing by 19, 20% y o y. Why is that happening?

54:31 But, again, that... You see the top line growth is even better. Yes, sir. That is true. But just in terms of fixed cost My top line growth is 26%. Yes, sir. I know that. But this this... You know, it always... The reduction doesn't take place overnight. It's a process because if anywhere we feel that this cost is high, even if we today decide that we want to reduce, it's a process. I can't overnight change the thing. So because of that, with the late things are happening, and that is why you are seeing that things are improving. Particularly, if you see that this quarter, you will see that is a much better position. So slowly and gradually, we are of the view that the operating cost will not go up from here on. It is every quarter on quarter, for some time, it will keep falling, falling and falling.

55:22 And in the Q3, it will be further benefit because whatever the pass through has taken place in the month of October, that benefit will be available in Q3 only. So then the or it will be further percentage term will go down. Like, this one, I think, quarter roughly, I don't have a good number, but somewhere around $1.90 rupees kind of realization was there. But the next quarter, we are expecting it will be more than 200. So this this is going to help to absorb the overhead much faster. So wait for some more time, but at least from here on, you will see there is a reduction. Got it, Dhawai. Thank you so much for answering my question, and happy Diwali to everybody.

56:07 Thank you. Same to you. Same to you. Thank you. Next question comes from the line of Arun Beti with ICIC Securities. Please go ahead. Sir, just one clarification. For the India business, is that guided for the full year? So, like, we have guided 14, 15% kind of minimum EBITDA for the full year. That was our original guidance. Correct. Again, at first half, we are at 11.5. So we we are expecting that year end, we will be closer to 13, 14% kind of run rate. Okay. So, miss, you're saying for the full year, that would be around 13%. Right? Full year. Full year. Full year. Full year.

56:53 Just I think I think looking to the way the crude is behaving and the some of the chemicals have started softening and some of the materials which we'll make in house also through DSS, we will and we all will work harder to be around 14%, and this is what we will be working for next two quarters by the year end. Okay. Just that road map with regards to which is the question asked before this, was the road map for over expenses, you know, which had gone up for various reasons. So that roadmap will be clearly visible quarter on quarter to us as investors over the next few quarters. Yeah. Yeah. That is what I communicated to Rahul that you wait for the q three, you will see the improvement in q three itself.

57:43 Right, sir. Thank you very much for this. That road map will be completely visible, and that road map is all on our mind. And you will see the road map in q three and q four itself. As there are no further questions from the participant, I now hand the conference over to the management for closing remarks. Thank you, and over to you. So thank you, everyone, for joining us in the first half results and the Q2 results of the Astral, all the businesses. And there have been challenging times, there have been challenging quarters in the past also.

58:30 But Astral has been very clear about its path going ahead of growth, maintaining margins and continue to grow and deliver in every business. At the same, Astral has always been very, very transparent in coming, communicating, and giving the numbers and the future guidelines. And I'm sure that you will appreciate this and there are quarters in the past and happens one more quarter comes and... But at the same time, teaches us many things and we are always bounced back with better quarters immediately. And this is what our guideline is, and this is what we are working on. And we will come back to you with the next quarter and the year end. So thank you everyone for joining us and wishing everyone a happy Diwali, happy New Year, and the best wishes to everyone.

59:23 Thank thank you, Pranav, for thank you, Pranav, for hosting this call, and thanks everyone for party... All the participant, and wish you all a happy Diwali and happy New Year in Erdogan. Thank you, you, everyone. Wish you a very happy Diwali and a very happy New Year. Thank you. Sameer, you want to say something? Hello? Okay. Okay. Thank you, everyone. Thank you. Thank you so much, team. Ladies and gentlemen, on behalf of Equator Securities Private Limited and ASTRAL Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your lines. Happy Diwali, and happy New Year.