Astral Limited (ASTRAL) Q3 FY2026 Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, and welcome to the Astral Limited Q3 FY '26 Earnings Conference Call hosted by Investec Capital Services Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ritesh Shah, Joint Head of Research Analyst Materials and Mid-caps. Thank you, and over to you, sir.

Thank you, Swapnali. Thank you, everyone, for joining on for Astral's Q3 call. We have with us Mr. Sandeep Engineer, Chairman and Managing Director; Mr. Kairav Engineer, Executive Director; and Mr. Hiranand Savlani, Executive Director and CFO. I'll hand over the management for opening remarks, post which we'll have a Q&A session. Over to you, Sandeep bhai, Kairav, Hiranand bhai and congratulations for a good set of numbers for the quarter. Over to you, sir. Thank you.

Thank you, Ritesh. Firstly, I welcome all for this earnings call of Q3 FY '26. As you all are aware, the polymer industry has been passing through a volatile time and challenging times. Prices have been highly volatile, fluctuating and a high range of uncertainties that prevailing. In spite of that, as usual, Astral is a company which always focuses on growth at the same time on profitability and which -- once again, we have demonstrated in this quarter also by giving a 17% volume growth with 18.20% EBITDA margins. I'll now take you through all our verticals. First, taking through the pipe vertical. The overall industry level demand has been fluctuating, but Astral started getting benefit of decentralization of plant and also taking market share in new geographies with the new plants and addition of a great number of product lines, product portfolios. As you are aware that Astral has spent INR 1,400 crores in CapEx in last 4 years through all the verticals. And now it is the time to utilize the same and generate the cash flow from all these expansions. As communicated in the past, we have not only increased the capacity but also increased our product basket in the last 3 to 4 years. Since its base is still low, but it is giving a very good performance, namely these product lines which have been growing at a good rate are water tank, our valves vertical, our pile sprinkler vertical, our OPVC pipe vertical, our PTMT valves vertical, low-noise product vertical, electrofusion fitting verticals and some more verticals, which we have added in the last 3 to 4 years, have also given us growth and a good margin. Our Hyderabad plant has started gearing up very well. And now Kanpur plant has also started and has started generating revenues and growth. Both these plants have given us good growth in volumes and market share. And they will continue to give us good growth in volumes and market share. Kanpur plant, we commissioned first the water tank and then later on the pipes, and we have got good response from the market. So, we are also increasing its capacity on a fast basis. Our CPVC project is going very well. Our construction work has commenced and substantial construction work has been done. Complete machinery orders have been placed, and we are expecting to have trial runs by this Diwali around the Q3 of the next fiscal. And by Q4 of next fiscal, the plant will be operational. So we are going as scheduled in our new project of CPVC, and we will keep you updating on the progress. As you are all aware that Astral has never compromised in the quality front of all our products. And that is the reason today Astral is enjoying highest domestic and international market share and international certification of all our products have been obtained. I'm happy to let all of you know that recently, we have got a DVGW certification from Germany for all our electrofusion product range. This certification is very important to not only sell product in India with certain projects, but also a global trust has been established, which will help us to export this product line. And this certification is also equally important for the selling of our fittings and pipes to the gas market. So this will open a door for the domestic project as well as international projects. In Q3, we have launched STP Pro in collaboration with an American company. It is very energy-efficient sewage treatment plant that converts wastewater into reusable or non-potable water. Its design has been so robust that it is made from plastic tanks, and it is a corrosion-free design, very low maintenance and the running cost is also very low, and you can remotely monitor these plants. So STP Pro caters to the residential and commercial and industrial usage in the STP segment. I'm happy to let everyone know that our PEX-Aluminum-PEX machine is ready. Our team is there to take the final trials at the manufacturer there, and this machine should be shipped to India in the next couple of weeks, and we would be launching this product in Q4 by the middle or the end of Q4. So, we will be making PEX-Aluminum-PEX in India and launching it to the Indian market. In our Bathware business, as communicated earlier, our product acceptance in new projects is increasing fast and our order book is also improving very fast day by day, which clearly indicates that the coming time, the business will also scale up to a good level and the acceptance of Astral Bathware has been established and is growing at a fast pace by good customers, which also clearly shows that the confidence of our product is greatly growing in the market. I'm happy to inform that Q3, we were able to grow in our top line by 36.5% in our Bathware segment. We are also launching a couple of new product lines in Bathware segment in coming quarter and coming 1 or 2 quarters. Adhesive business. This quarter also, we have a robust growth in this business by 14% with a very healthy EBITDA margin of 17.3%. We have expanded our business also in exports in Middle East and various other countries, and we have now a team and an office which runs from Dubai to establish this market and grow this market. Adhesive business, I would like to also brief you that the going on expansion of some of the chemistries at Dahej is also on and will be completed by this fiscal year. So, we will have certain product lines, which we make in segregated plants at Kanpur and Ahmedabad will now be centralized at Dahej with a good capacity and fully automized plant with a cost effectiveness in the production. In Adhesive U.K. business, as we have always communicated that we passed through a challenging time in U.K. business, and we took multiple actions to make these corrections with a new CEO in place from India as well as a lot of corrections at the plant level for stocks, the inventories, the raw material correction, the purchase correction. So many of these corrections were taken place in last 1.5 quarters. So, we have got a healthy growth in our top line by 16%. Yes, the margins have been under pressure. The margins have shown from almost minus EBITDA to it has come to a flattish EBITDA. But this quarter, I would come back with a very good EBITDA number and a growth number, and we will all communicate on this as the quarter ends. But we are sure the business has been online, has been on growth and will not only give growth, but come back to a healthy EBITDA margin. In U.S. also, we have made certain structural changes, the manpower changes, and we are seeing now very, very positive growth in the U.S. market. And the same growth should continue, and the margin improvement will continue at a more faster pace in the U.S. market. Coming to the Paint business. We all know that there are challenges in Paint business. But in Paint business, I would happy to inform that as we have been communicating and as we have been working hard in new markets, new geographies, we opened the best geography of Gujarat, Rajasthan and parts of Maharashtra. And we are making our South geography where we are present in Karnataka, Kerala and Tamil Nadu more stronger, and this has given us a 21.6% growth in the Paint business in the last quarter. And we are sure that this quarter will be equally good on our growth side, and we would be -- as we have guided, we should be around the number of 20% or a little above 20% in our growth in our Paint business. We have certain challenges on the new business is there. So, we have to take on certain challenges, and we also need to have a good amount of manpower, which will rationalize in coming 2 or 3 quarters in all fronts with growth and the reduction of these costs as the growth comes by. Lastly, I wanted to inform you that as a responsible organization, we believe in environment, sustainability and governance. I'm very happy to inform you that recently, our organization has got upgradation of our DGSI ESG score from 48 to 60 against our industrial average of 33. With this, I'm closing my remarks, and I hand over to Hiranand bhai for the financial performance of Q3 outlook and outlook for the rest of the year, and I'll be happy to answer whatever the queries you have in the question answer session. Thank you very much.

Good afternoon, everyone, and welcome for the earnings call of Q3 FY '26. Results and press release are in front of you. So, I just wanted to highlight the category-wise number. Pipe sector last year was INR 990 crores of sales. Again, that this year is INR 1,072 crores of sale. Last year, EBITDA was INR 183 crores, again that this year is INR 195 crores. Adhesive India operation last year, it was INR 280 crores of revenue. Again, that this year is INR 319 crores of revenue. EBITDA was last year INR 46 crores in Q3 and again that this year is INR 55 crores. Adhesive U.K. has grown up from INR 77 crores last year to this year, INR 90 crores. against the EBITDA of INR 0.5 crores this year, it is INR 1 crores. So almost it's a flattish EBITDA. Paint business last year, it was INR 50 crores. Now this year, it is INR 61 crores. So last year, the EBITDA was INR 2 crores. Against that, this year is INR 4 crores. So total EBITDA last year -- sorry, total revenue last year was INR 1,397 crores. Again, this year, it is INR 1,541 crores. And total EBITDA of last year Q3, INR 231 crores, against that this year is INR 247 crores. As you all know, we're always believing in 2 things, one, profitable and consistency of growth; and secondly, gaining market share, and I'm very happy to share that this year also, we have repeated in both this parameter. I'm very happy to share that in this quarter also, we have delivered a very healthy 17% volume growth with a very healthy EBITDA margins of 18.2% in our plumbing business in spite of a lot of challenges in this industry. We are continuously facing downward pressure on polymer since last 3 years, but now it looks that bottom is formed and polymer has just started upward journey, which we are closely monitoring. The number which we have given to you is including the inventory loss of close to about INR 20 crores to INR 25 crores because of the reduction in the PVC and CPVC prices. Adhesive business in India is continuously growing as per the guidance of 15% kind of run rate and a healthy EBITDA of 16%, 17%. Paint business, as communicated earlier, we are continuously on the path what we have guided of 20% plus growth. So we have maintained this, and on a full year basis also, we are confident that we will be able to deliver that. We all know that our numbers and cash flows were under pressure because we had spent a sizable amount of close to about INR 1,400 crores to INR 1,500 crores on CapEx in our existing business in last 3 years. Post that, the polymer prices started declining, which gave us pressure on growth and the cash flow. But from here on, you will see a good improvement in free cash flow. Also, all our new verticals have started positive sign, and we are confident that from next quarter onwards, you will see across the board growth and the improvement into the margin. Due to change in the labor code, company has provided INR 16.5 crores in Q3, which we have shown in the exceptional item, and because of that, our PAT has reduced to that extent. Now Q4 has started with a good note and polymer prices have started going upward and demand on ground has also started picking up. So, we are very confident that the guidance which we have given to you, we are going to definitely achieve that thing, and we may be a little better in Q4. That is what we -- initial January and February beginning is showing. But let us wait for the quarter end, and then we will communicate the exact growth. Now I'm opening up the floor for the Q&A session. Over to you, moderator.

[Operator Instructions] We have first question from the line of Shravan Shah from Dolat Capital.

Congratulations on a good set of numbers, particularly on the volume growth pace in the industry. Sir, in your opening remarks has highlighted that Q4 now given the January looks better, but still just trying to understand in terms of double-digit plumbing volume growth that we have given at 12.3% we have already done. So, can we look at kind of 13%, 14% kind of a growth for the entire full year?

Definitely more than that.

Can you -- is it fair to say any number closer to 15%?

So see, it is too early to say, but I can say the beginning of the January until February today, we are better than the Q3.

Okay. Okay. Great. And then going forward also for even for next couple of years that previously also we said that double-digit growth, that stand remains intact.

Definitely, because we have already communicated that our CPVC plant is going to come next year. And then the growth trajectory will be completely changed. And we will unlock our strategy for the growth once our plant -- you can say the trial runs get over, we will communicate that strategy to you. So definitely, we are confident that double digit should not be a problem to us.

We have the next question from the line of Sonali S. from Jefferies.

Congratulations on a great volume growth. Sir, my first question is certainly the volume growth has been very good last quarter, this quarter as well as well as your commentary on January and February. So can you help us understand which sectors exactly have -- are giving you good traction for this kind of a volume growth? What has changed versus the same period last year?

I think all sectors are doing equally well for us. It is not one particular sector. I think CPVC is also doing good numbers for us. Even PVC traction has been good. And a lot of new product line additions that we have made in the last couple of years have now matured and are moving sizably well in the market. So all the verticals, I can say in the division are firing, only then we are giving right now since the last 2 quarters, we are giving industry-leading growth kind of a number.

I meant either B2C or B2B has infrastructure come up or residence...

Government spending has been muted. So government side, obviously, that spending has not come. So B2G side is very less. And B2B and B2C, both businesses are doing good because project sale has also been good and retail sale has also been good.

Great. Sir, my second question is regarding PVC price. Now I understand it's very difficult to really estimate even qualitatively or directionally where PVC would go from here. But just want to understand from the channel perspective, have they started restocking because PVC is going up? Or are they still in a wait-and-watch situation?

No, no. restocking has been there.

And do we expect this PVC to stabilize considering that ADD is not...

I think more or less PVC, another maybe INR 1 or INR 2 up move may be there, but largely, then it will stabilize around these levels then.

Great, sir. Sir, and lastly, CapEx guidance.

I think we have given the CapEx guidance for full year around INR 350 crores. Again, that we have utilized so far INR 290 crores in 9 months.

Understood. Sir, could you remind us of your full year guidance once again on volumes, revenue, margins, et cetera?

We have given double-digit guidance for volume. And we are already 12%, 13% in 9-month basis. And EBITDA margin on polymer, we have given close to between 16% to 18% range. And Adhesive and Paint, we have given between 12% to 14% margin.

We have the next question from the line of Shravan Shah from Dolat Capital.

Sir, given that also you can also confirm that from 1st January INR 7 PVC price hike and Sir also mentioned that INR 1 or INR 2 more price hike can further come and then stabilize. So let's assume that it comes or whether it doesn't come and this INR 7 stays as it is, the hike. So probably, if someone has to look at for this quarter, how one can look at in terms of Q-o-Q price increase or realization increase for us and whether this INR 7 has been passed on to the customers?

I think out of INR 7, we have already passed on INR 5. And this week, we are going to pass on the balance INR 2 also. So majority, you can say we have passed on to the market.

Okay. Got it. So okay. So based on that broadly and in terms of the product mix, the 4Q relatively has a slightly better CPVC share versus 3Q that way one can look at. So trying to understand the kind of realization growth for the fourth quarter.

So like historically, you see the Q4 is always at the peak in terms of volume, in terms of margin, both. So we will continue this trend in this year also.

Okay. Got it. So there is a possibility that we can even touch the kind of the upper band of the margin, 18% that way one can look at?

We almost this quarter also, we are close to that only. So even Q4 will be better because some element of inventory gain may happen in Q4.

Yes. And sir, Bathware now has that stage came where we now can look at in terms of the EBITDA margin also, it start contributing?

So like Bathware is club with the pipe business. And in the bathware factory, both products of plumbing as well as bathware is manufactured. So now it is very difficult for us to segregate the EBITDA level in the Bathware category. So that is why we are clubbing with the plumbing only. Earlier, this brass ring and all was not manufactured in the same plant. But now because we were having the ideal capacity, so we started manufacturing that bathware in that plant.

But largely, we are not loosing much money in the Bathware business. It is at a breakeven point. So, from next year onwards, it will start contributing to the EBITDA level also.

Yes. And lastly, on the U.K., sir, has mentioned that from Q4, we will start seeing a growth and on the margin itself. But directionally, for FY '27, if one has to look at U.K. Adhesive business, how at a margin level one can look at. And the Paint this quarter has done a decent kind of a 6.5% kind of a margin EBITDA level. So, can we start now seeing 8%, 9% kind of a margin from for FY '27 onwards?

So like the Adhesive U.K., we are expecting a minimum higher single-digit growth minimum because now also growth is good. The last quarter also growth was there, 16% kind of growth was there. And similarly, in the margin front also, we are expecting a single digit, maybe mid-single digit or maybe higher single-digit margin minimum. Because we have just recently done a lot of correction. So, we don't want to jump in and give the higher guidance, but our expectation graph is high. So definitely, next year, both fronts, we are going to perform well in U.K., but keep finger crossed because after doing a lot of correction, we have to give some time and then only we can expect the result. So let us wait for 1 or 2 quarters. And if required, we will change our guidance also in the coming time. And as far as...

Go ahead, sir.

So what was your other...

Yes, sir, lastly, I was saying that the CPVC backward integration, I think last time we said by Q2 FY '27, we will start, but now we said that the trial run will happen and from Q4 FY '27, the production will start. So just trying to understand...

Q3 next fiscal, the trials will happen and Q4 next fiscal, the plants will be regularized. And this is only...

Q4, you will see the commercial production.

Yes, yes. So main volume contribution actually will start from the FY '28 onwards.

Yes. FY '28 full contribution will be there.

We have the next question from the line of Pujan Shah from Molecule Ventures.

Am I audible?

Yes.

Yes. Sir, my first question pertains to the PVC. So, understanding the current scenario dynamics and we are also hearing out that there is a repeat forego from Chinese government, which ultimately inch up the prices. But do you feel that before that, there would be a severe imports being coming out at lower prices, which would ultimately impact the current realization?

No. Right now, there are no major low-priced imports coming in. Majority of the Chinese quotations are also around the $680 to $690 level. Some are even at the $700 level. And Formosa has not given the prices this month. They might give the prices next month only. So I think largely import PVC should get be around the $700 mark and majority of the low-cost material that was supposed to come in, most of that has come in, in January and February. So we don't see further low-cost materials coming in much.

So I just want to understand the inch getting prices has been increasing is due to first, the shutdowns in certain regions or it is more linked to the rupee CY or rupee dollar per ton.

There is a lot of things at play, but since we are not a PVC resin manufacturer, very hard for us to articulate exactly why the PVC prices are going up because this is something the raw material manufacturer per se would be better people to answer.

So what is our limited understanding is that PVC manufacturers were bleeding. And you can see very well this into the numbers also because many of them are listed players. So from there also, you can get a sense that how long any company will sell the product at a loss. So it has to happen, but sometimes it may not happen as you plan. So it may sometimes delay also. But ultimately, it has to happen because this kind of losses, any manufacturer cannot sustain for a longer period. So now I think everybody has understood and now they have increased the price. And still, it is not that high price. If you compare the price today also, it is not that high.

And sir, just to add this, are you positive on MIP thing, which has been right now in the discussion for right now going on in the industry?

See, we are not sure about what is happening because, again, we have very limited visibility on all these items since these are raised by the raw material manufacturers, then they are working directly with the government of India. So, we have a very limited visibility on all these things. So, it will be better that you reserve this question for the raw material manufacturer because we are in no place to answer all the questions.

Sure, sir. My last question pertains to the OPVC vertical. So, in the recent budget, even we have seen in the last year, there was a very muted spending from the government end. And we have seen that has been spillover effect in the OPVC segment. But now I want to understand the first thing is in the budget, there was no key announcement on the JJM part. And are we still positive for this OPVC vertical considering the muted demand scenario and second, the increase in competition?

We have -- one is we have got the -- some private orders. So, the machine has been running. We have not spent on high technology cost from abroad, which all have done. We have in-house worked with our technical teams to jointly work with a few companies to develop this machine, which has given us a very low CapEx level for putting these machine, 2 machines and 1 more under manufacturing. So, first is our CapEx level of this machine has been very, very controlled compared to others. We have no license from anyone. We have no obligations of giving any charges of technical fees, which everyone have done with the foreign companies where all the machines have come. And at the same time, we have made the machines in such a flexible way that whenever they are available, the machines can be used to manufacture alternate products. So for us, we -- this product line has been a good addition. And our products have passed through every test. Our product has ISI passes through every test, 17, 18 kilometers lines laid by our machine, our product. So for that, realizing the challenges of future, and B2G products our B2G business, we have always gone very cautiously in investing and putting these machines without no fringe thing with nothing attached to -- no screens attached to it with technology fees or any other royalty fees or any tie-ups that we cannot buy, any other machine. So that way, our OPVC has been a strategic decision and very rightly taken decision with our own in-house technology.

So just to add to your specific question of JJM, I think Government of India has allocated INR 67,000 crores for JJM this year budget. It was not a frontline announcement, but if you see the allocation is there. Last year also, they have equally allocated the amount, but it is unfortunately, the spending was only INR 17,000 crores as per the revised estimate of the budget. So actual spending doesn't took place last year. So because of that, there was no demand at all for this product. But now this year, we are expecting that they have done this announcement or definitely, government is going to spend that much of money. And in that case, everybody will get some portion of that business.

Secondly, all the states where OPVC has been in use and is presently also used, Astral has got approval of all these states for the OPVC pipeline.

We have the next question from the line of Shaleen Kumar from UBS India.

Congratulations on the good set of numbers. Sorry for again harping on the volume side, sir, but I just want to understand the trajectory because if I -- is it fair to assume that in November because we didn't get the antidumping duty and then there was a subsequent price correction in PVC. So the November was pretty soft. And you guided for 20% kind of volume growth in October. So then if you're achieving 17%, then your December should be upward of 20%. So my question is, is that kind of volume sustained in January as well, 20% plus kind of thing? That's question number one.

So yes, January, it is more than that, what is you are expecting.

Okay. So it's more than 20%. Okay. Okay. That's good, sir. Second, sir, you made a statement just need to -- if I hear it clearly, that you said that in the quarter, did we see INR 20 crores, INR 22 crores of inventory loss?

Yes.

So effectively, that will add on to this quarter. And again, then if the PVC price remains stable because we've already seen a 10% improvement in month of January, I believe we should see some inventory gain in this quarter?

Logically, yes, but we have to see how the volume is panning out in the rest of the portion from today to 31st March, how the demand scenario is there. Based on that, we have to effectively work out the price.

We are balancing the volume growth also, and we are balancing the bottom line also. So very hard for us to comment on the inventory gain side right now because again, we want to continue our volume growth trajectory in Q4 also. So obviously, we will take an aggressive stance in the market.

Understood. But even assuming, let's say, everything remains same that INR 20 crores, INR 2 crores, which we had an impact last -- in the 3Q will reverse in 4Q, right, with that kind of volume.

Typically, your understanding is perfect. And that is what in initial comment also I communicated.

So sir, basically, then I see multiple margin levers for you. One, PVC prices shooting up. You're coming from a base where you had inventory loss, so that's go away. Then your Kanpur plant as the occupancy ramps up, I believe that right now, it may be at a low margin, even I don't know whether it's EBITDA breakeven or not, but then that also the profitability should come back. So, there is a good chance that you should beat your margin guidance.

Keep finger crossed. We don't want to unnecessarily speculate the thing, but we will try our best.

We have the next question from the line of Rahul Agarwal from Ikigai Asset.

Sir, first question was on the CPVC resins, right? I'm assuming that last time we had this discussion on the last earnings call, I think you had mentioned it will be 100% captive usage. And whatever you produce essentially gets used internally. So, let's say, fourth quarter of fiscal '27, this will be more or less intersegment sales and will be canceled off. And whatever EBITDA we make on this will be part of the plumbing business segment increase in the EBITDA margin. Is this understanding correct?

Yes. On a consol basis, yes. But otherwise, it is a separate company. We are having 80% stake in that. So to that extent, we have to separately show.

Right. So consol, it will be line by line, and then we'll just have the margin sitting in the plumbing side, right? That's how it gets accounted.

Correct.

Okay. Any guesstimate or anything you would like to indicate based on your capacity, I think you spoke about 40,000 tonnes of first phase. How would -- how much incremental margin can the plumbing business actually enjoy because of captive reasons?

I think it is too early to say unless until we have not received a few months' performance, I think it will be too early. But I can say indirectly, you can see what other people are manufacturing in CPVC. That margin are already available in the public domain. So, you can consider that. We are on the contrary of the view, our margin should be even better than that because we don't have any marketing-related pros. We don't have any other related because ultimately, it is a captive consumption. So, our margin should be better than what the other players.

And also, obviously, we are not here to enjoy huge margins on the CPVC business rather than that, our strategic aim is to make this backward integration and gain market share. So, we will also have our eyes on gaining higher market share in the CPVC vertical in the coming years.

Right. Got it. And this entire facility will be making only CPVC resins, right? There is nothing else which is planned in the plant?

No.

Okay. Perfect. And just last question. I mean, given you've expanded quite a bit in terms of CapEx, new plants, in terms of your distribution reach, partnerships with dealer distributors on the Adhesive side as well as on the piping side and branding. Anything we're doing specifically which you want to highlight, which can actually aid -- which can differentiate Astral versus somebody else?

We are out with a lot of -- so we are coming out with a lot of new age products. So, I will openly extend the invitation to everyone present on this call to visit us at Plumbex in Bangalore this year in April. And we are coming out with the next generation of plumbing and drainage products for India -- so the products that will have the -- they will be the next levers of the industry for the next 2 to 3 decades. So, we have multiple new product lines and product categories being added to our arsenal in the month of April. And next year, all these product lines will also aid to the volume margin as well as the top line growth. So we have a sizable new product launches in the month of April in Plumbex in Bangalore, and everyone is welcome to come and experience it.

And even you must have come across our recent branding campaign of Bondtite brand in which we have engaged as a brand ambassador, Ranbir Kapoor, and that is giving us a very good mileage in the market. And even after charging that cost also, our margins are pretty decent into the Adhesive business of India. So with this campaign and all, our brand will be more visible in the market, and we are expecting a sizable growth in that category also.

Right. Perfect. Anything on the channel side? I mean, is there any work happening on that side?

So that is a regular exercise. Every quarter, every year, we keep adding our dealers, we keep adding our distributors. And now, particularly when we have added the new geography plant, so definitely, that side also, we are continuously adding.

So now what has happened is that we are breaking away from the pack, okay? So, piping in India is largely everyone talks about CPVC and PVC, we are quickly breaking away from the pack. And with the new products that we are launching, we are becoming more and more attractive to our channel partners and to the channel partners of the competitors also. So a lot of people are keen to join Astral because the type of products that we are now working on and developing, the new age products, our competitors are lacking in that. So it will obviously help us to gain more and more market share and more and more channels also.

We have the next question from the line of Tejas Pradhan from Citigroup.

Apologies, I think I missed the inventory loss number that you had mentioned at the start of the call. Can you highlight for the third quarter and 9 months?

We said approximately INR 20 crores to INR 25 crores will be there.

For this quarter, right? And 9 months, what would it have been?

Yes, 9 months, I don't have a handy. You call me, and maybe after this call, I may find out that number also.

Sure. No problem. No problem. And secondly, on the new capacities in Kanpur and Hyderabad, what is the utilization currently? And how should we look at the ramp-up over here in terms of...

Kanpur, actually, we had underestimated, and Kanpur is actually whatever small PVC capacity we had is already filled up. So, actually, Kanpur, we are ramping up. The response to the Kanpur plant has been very good, and our aggression also matches that. And with regards to Hyderabad, I think it should be around 50%, 55% level should be there.

In fact, Kanpur, we have added the capacity this quarter also.

Okay. Understood. And lastly, on the industry growth for the pipes, would you have a sense this quarter and versus prior.

I think the industry as a whole is growing at a single-digit level. I think if you do the average, I think it should be the single-digit type volume growth should be there in the industry. I think a lot of numbers are still pending. So, I think it will be too early for us to comment on the industry growth. But yes, one thing is clear in this number that the leaders are growing fast in this market, and the smaller-sized companies are facing a challenge in this market.

We have the next question from the line of Keshav Lahoti from HDFC Securities.

Firstly, congratulations on a strong set of numbers. So my first question is, if I see your India operations, so that revenue, as you highlighted, is INR 319 crores and EBITDA margin is 17.3%. So that implies an EBITDA of INR 55 crores for India operations. But the total EBITDA for Adhesive and Paint combined is lower than INR 55 crores. In the press release, you have reported it is INR 51 crores, while OPVC and Paints are profitable. So why is there this mismatch? I mean, what am I missing in this?

I have to check that individual number. You can call me after this call, but it should be INR 55 crores is Adhesive India, Adhesive U.K. is INR 11 crores and Paint is minus INR 4 crores. So it should be more or less INR 4 crore.

Paint is minus INR 4 crore. Understood. And you said the Adhesive and Paint margin guidance is 12% to 14% for this year. The reason I'm asking because so far, 9 months is 10.8%.

We have given the guidance, but because of the U.K. negative and the Paint negative, we are not at that level, but that is what we have guided, and we are trying to catch up in the last quarter, maybe a little short of that. I don't know exactly what will be there. But now there is a lot of improvement. And this quarter, we have charged money for this branding activity also. So, because of that also some pressure was also there on the margin.

We have the next question from the line of Sneha Talreja from Nuvama Wealth.

Congrats on a great set of numbers. Just a couple of questions from my end. How do we gauge how much is the secondary versus primary demand at this point of time in the system? We all understand that PVC prices are going up and the channel is destocking, as Kairav Ji said. But how do we gauge how much could be a primary demand? And sir, you did mention that demand on the ground has picked up. Are we seeing...

I think restocking is very minuscule, okay? Restocking is happening, but it is also getting emptied at the dealer level. So secondary demand, we are tracking the secondary demand through our DMS. So secondary demand is looking bullish in Q4 versus Q3 also. So, I don't think many of the dealer distributors are sitting on a hefty inventory right now.

So, Sneha, you can compare that number in another way, also that December was good for the industry. We all did a very good number in December. Equally, everybody has done a good number in January also. So, without the secondary sale or the ground demand, I don't think that the distributor will stock so much inventory. So genuinely, there is an improvement on the ground. You can also check from your channel check. But whatever information we have from our people, they all say that the ground-level demand is also very good.

That was pretty helpful, sir. Sorry, one last bookkeeping question. Can you give the split of revenue as well as EBITDA? I missed both in terms of revenues as well as margins.

Indian INR 319 and U.K. INR 90.

And the same with margins?

Margin 55% and 11%.

One more thing I would like to add here is that everyone must know and understand is that we are giving growth. But at the same time, we are giving the best margins. That is very important. People have sacrificed use on margin, but no substantial growth has been given. So that is very important. This whole industry, looking to the volatility and the challenges, must keep the margins intact, and that is exactly what all of the analysts should also benchmark and understand that, keeping the margin intact, we are given growth. That is very important.

We have the next question from the line of Meet Jain from Motilal Oswal Financial Services Limited.

Sir, first with the bookkeeping question. Can you allude to what kind of CPVC growth we had this quarter and the 9 months?

We are in the double-digit growth only because, as you can say, we are a major CPVC player. So if we are growing at this level, I think we are equally growing in CPVC. So we have not lost any market share in CPVC. In fact, due to our aggression, we have actually also gained some market share over the last couple of quarters. And we will continue this aggressive stance in CPVC, and we'll continue to try and take market share from other players before the plant comes in. So we have a sizable base.

Understood, sir. Secondly, on this new product launch of STP Pro, what kind of market opportunity do you elaborate on? Like what kind of demand size? And can you throw some light on the opportunity size of this segment?

I think we are still evaluating that thing. We don't have an industry exit number with us. Unless any of the analysts have this number, please share it with me. So we don't have an exact idea, but we have a certain sense. So maybe in the next quarter, I will be ready with that number, and I will definitely share it with all of you.

But today, the government has made it compulsory for locations where houses are built to have STP and not have a well to recharge the water back because this is wastewater. And so this compulsion will increase this market to a substantial amount. And wherever you go to all developed countries, the STP market is a huge market. There are companies in Europe or many developed countries only making STPs and having a huge, substantial turnover. So this will take a few quarters or some to understand and grow. But number-wise, we'll be able to give an estimation in 1 or 2 quarters.

Understood. Lastly, one clarification regarding the U.K. business margin for the last year. You mentioned that around INR 0.5 crores was the EBITDA for last year versus INR 11 crores right now.

No, no, sorry. INR 11 million, not 11 crores. INR 11 million.

Okay. And for Paints, EBITDA loss this quarter was INR 4 crores versus loss of INR 2 crores last year, how it was, sir?

Last year, INR 2 crore profit was there.

[Operator Instructions] As there are no further questions from the participants, that concludes the question-and-answer session. I now hand the conference back to the management for the closing comments. Thank you, and over to you, sir.

So thank you, everyone, for joining this call and looking forward to meeting you in person after Q4 and the fiscal end. And we are all geared up to work hard for the last quarter. And thank you very much once again.

Thank you all the participants for joining this call, and thanks, Ritesh, for organizing this call. Thank you.

Thank you, everyone.

Thank you, management members. On behalf of Investec Capital Services Private Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.