Astral Share Price Hits 5-Month Low On Demerger Update; What Should Investors Do? Experts Decode

Shares of Astral Limited fell nearly 8% on Monday, June 29. The company's scrip declined nearly a day after its board of directors approved the demerger of its chemicals business. The demerger is expected to create a near-term overhang on the stock's performance as investors will assess its standalone business multiples.

Astral share price closed 8% lower at Rs 1366.9 per share on Monday, June 29, with a market capitalisation of Rs 36,721.79 crore. The stock had touched an intraday high of Rs 1,433.75 per share and an intraday low of Rs 1,339 per share.

Astral Demerger Details

Astral Limited announced the demerger of its business into Astral Limited and Astral Chemie. The latter company's business will mainly cover adhesives, paints and speciality chemicals. The two focused entities with independent allocation, dedicated management teams and enhanced operational efficiency.

The demerger will consolidate Astral's entire chemicals portfolio under Astral Chemie, including the paints and coatings business. The residual company, Astral Limited, will focus on plumbing and building materials.

Astral Demerger: What Will Shareholders Get?

Eligible Astral shareholders will receive shares of Astral Chemie in a 1:1 ratio. The listing of the new entity is subject to regulatory and shareholder approvals and may take at least 12 months.

Astral Share Price Outlook

The plumbing business is expected to benefit from the upcoming CPVC backward integration, continued product additions and healthy growth across the faucets and sanitaryware portfolio, as per PL Capital report.

Astral Chemie is entering a phase of stronger profitability driven by the completion of its major capex cycle and it will improve performance in the paints business, the turnaround of the UK and US operations and scaling up of the high-margin DSS specialty chemicals platform.

The proposed restructuring is strategically positive as it creates two focused business platforms with independent management teams and capital allocation frameworks. The separation is expected to enhance strategic focus, operational efficiency and decision-making agility, as per PL Capital report.

Astral Share Price Recommendations

The brokerage maintained 'Buy' rating for the stock with a target price of Rs 1,779 per share. "We estimate sales/EBITDA/PAT CAGR of 18.8%/22.5%/34.4% over FY26-28E. Maintain 'BUY' rating with revised SOTP-based TP of INR 1,779 (INR 1,863 earlier)."

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