For years, Astral has largely been seen as a pipes and plumbing company. But that picture is changing steadily. A smaller part of the business is now growing at a pace that is difficult to ignore, while Astral’s core plumbing franchise continues to remain the much larger revenue contributor.
That raises an interesting question: if the newer businesses continue to scale faster than plumbing, could they eventually become large enough to change how Astral itself is structured?
The answer may depend less on the demerger proposal and more on how quickly this business can build scale and profitability. With a market cap of Rs 37,100 crore, the shares of Astral Ltd are trading at Rs 1,383 and are trading at a PE of 63 compared to their industry’s PE of 21.
Pipes Still Anchor the Business
Plumbing continues to be the core of Astral’s business, encompassing pipes and fittings, water tanks and bathware. Its scale advantage derives from its extensive manufacturing and distribution networks that include 21 manufacturing plants, a manufacturing capacity of 5.97 lakh tonnes, over 3,990 distributors and about 2.7 lakh dealers. Products are distributed in excess of 40 countries worldwide.
However, Astral has increasingly moved into newer categories such as adhesives, construction chemicals and paints, among others. What emerges is a portfolio structure wherein the larger plumbing business provides scale advantages, while newer building materials businesses contribute to incremental revenue growth.
Paints and Adhesives Are Growing Nearly 3X Faster
The clearest evidence emerged during Q1 FY27, when the Paints & Adhesives segment clocked in 29.5% YoY growth, while plumbing managed just 10.1%. The Paints & Adhesives segment thus grew nearly thrice as fast on a quarterly growth-rate basis relative to the core business.
This does not suggest that paints & adhesives are three times the size of plumbing, since plumbing is considerably bigger in scale. Q1 FY27 revenues were roughly Rs 1,050 crore for plumbing, versus Rs 326 crore for India adhesives, Rs 121 crore for UK adhesives and Rs 74.5 crore for paints.
It’s important for a few reasons. For example, even if a small business continues to grow many times faster than the core business itself, its impact on consolidated growth will eventually start to carry weight.
What Is Driving the Faster Growth?
Growth in paints & adhesives has had support coming from different businesses instead of just one segment. In India adhesives have had demand traction coming from rural consumers, e-commerce sales, foreign countries, newer geographic markets and new product introductions. There have also been developments within Astral itself whereby it has expanded both its product offerings and distribution footprint.
In the UK adhesives business, which grew 26% in Q1 FY27, the company highlighted the contribution from currencies at about 8–10 percentage points. Additionally, the business was also getting back on track after some past issues.
Within Paints, another key contributor, revenue grew 48.7% in Q1 FY27. Operating breakeven status was reportedly achieved during the quarter. What stands out is that while Astral remains relatively early-stage here too, it leaves plenty of scope for further distribution network expansion, product innovation and gaining market share.
The Shift Was Already Visible in FY26
The rapid growth in the first quarter of FY 27 was not entirely unexpected. Looking back at Astral’s financial performance in FY26, one would see that paints & adhesives were growing much faster than plumbing products.
Astral recorded revenues from its plumbing division amounting to Rs 4,679 crore during FY26, registering a year-on-year increase of 11.5%. On the other hand, paints & adhesives recorded revenues worth Rs 1,890 crore, with a revenue growth rate standing at 15.5%.
As per Astral’s financial statements for FY26, the proportionate contribution towards total consolidated revenues from paints & adhesives came to around 29%, compared to 28% last year. For the immediate future, Astral foresees continued momentum at CAGR levels around 15–16%.
Why Did Astral Consider a Demerger?
This shift in mix highlights the rationale behind considering a separation of the chemicals business. In June 2026, the Astral board approved a Composite Scheme of Arrangement whereby the Astral chemicals business consisting of adhesives and construction chemicals would be spun off into Astral Chemie Ltd. Under the plan, Astral shareholders would receive one share of Astral Chemie per share in Astral.
In addition, Astral Chemie would list independently following the spinoff. At the same time, there would be a merger between Al Aziz Plastics and Astral. There are distinct differences in terms of business profiles. Plumbing is a well-established franchise business with significant manufacturing and distribution capabilities. Conversely, the adhesives and construction chemicals businesses are relatively smaller and still at scale-up stages.
A separate organisational model would provide a more targeted framework for capital allocation and growth initiatives. However, before this could occur, the question arose about the adequate scale within the chemicals business to make it a viable independent entity.
The Demerger Was Withdrawn, but Could Return Later
The proposed demerger plan did not move forward. As per feedback from stakeholders, Astral conducted an extensive evaluation and decided to withdraw the Composite Scheme. CARE Ratings observed that the existing size of the chemical business would be an important factor during evaluation.
This suggests that there is no demerger plan currently in place. But the company stated that the demerger process may be revisited at some point in time when the chemical business attains adequate size and financial muscle to support its growth requirements.
In essence, what matters is not the structure or plan but how the business performs on its own merits. Whether Astral proceeds with the separation decision now becomes secondary to the issue of whether the Chemical Business will ever develop to become viable enough for separation.
Plumbing Still Has Multiple Growth Drivers
Although the newer businesses have grown at an accelerated pace, the investment pattern indicates that Astral continues to place significant bets on plumbing. Manufacturing plants in cities like Hyderabad and Kanpur have been added to facilitate regional sales penetration. The management has highlighted 40% plumbing volume growth in July 2026 and indicated four to four-and-a-half months of double-digit volume growth.
Another notable move involves Astral’s plan for establishing a CPVC resin manufacturing unit. Astral will establish a 40,000 tonne per annum capacity CPVC resin plant that CARE Ratings estimates to be commissioned commercially by December 2026. The plant will cater to approximately 40%-50% of Astral’s CPVC resin needs.
Backward integration into resin manufacturing might prove useful for profitability and efficient working capital utilisation in the long run. As such, there appears little likelihood that Astral will divest itself of its pipe-making operations to fund its newer initiatives.
The Real Test Is Scale and Profitability
In any case, the next step in Astral’s journey would hinge on how successfully its higher-growth businesses leverage their revenue growth trajectory into profitability sustainability. The Paints business posted an operating loss of approximately Rs 17 crore during FY26 while growing its revenue at about 23%. Management anticipates it reaching operating breakeven at some point during FY27. Meanwhile, the adhesive business in the UK should stabilise.
At the consolidated level, Astral’s PBILDT margin stood at 16.3% during FY26. Astral’s consolidated operating margins might move upwards towards 17-19%. From here on out, then, there will be three parameters relevant to tracking the performance of the chemicals business for Astral: revenues, margins and scale. If its growth continues alongside its move toward greater profitability, this might become more significant in the overall scheme of things.
Conclusion: What Should Investors Know?
The demerger is not an immediate trigger for Astral. The current scheme has been withdrawn, and any future separation would depend on the chemical business achieving greater scale and financial strength. For investors, the more important factor is whether the faster-growing paints and adhesives businesses can turn growth into sustainable profitability.
Q1 FY27 growth of 29.5% versus 10.1% for plumbing shows the potential, but the segment still needs to scale further and improve margins. At the same time, plumbing remains the core earnings engine, with volume growth and the upcoming CPVC resin plant providing additional growth and margin drivers.
In short, investors should not base the Astral investment thesis on a near-term demerger. The key variables to track are the growth, profitability and scale of the chemical business, alongside continued strength in plumbing. If those improve together, the demerger could become relevant again; until then, Astral remains a diversified building-materials company with plumbing at its core.