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Here's why Anand Rathi feels Astral Poly Technik, Supreme Industries are a buy

The brokerage feels product diversification and value addition are keys to growth.

March 28, 2019 / 01:16 PM IST
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Astral Poly Technik shares gained more than 2 percent on Thursday after Anand Rathi initiated coverage on the stock with a buy rating and price target at Rs 1,275, implying nearly 17 percent potential upside.

On Wednesday, the stock gained 2 percent.

"Its focus on CPVC pipes has driven faster growth in Astral Poly than in large pipe manufacturers," the brokerage said.

The brokerage house initiated coverage with a buy rating on another plastic company, Supreme Industries, expecting the stock to rally by 19 percent to price target of Rs 1,304 apiece.

Supreme shares gained 2 percent intraday, but the gains fizzled through the dayprofit booking dragged it to flat trade at the time of publishing this copy.

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The Indian pipes sector, which is around 70 percent of the plastic product industry, is structurally set to benefit from the government's rising thrust on irrigation programs and housing & infra expenditure, Anand Rathi said.

Pipes & fittings is the largest and fastest-growing segment in the plastic industry.

At around 70 percent of PVC consumption, plastic pipes & fittings is around Rs 28,000 crore market, registering around 12 percent CAGR over the past five years, driven by mounting demand from key user industries (irrigation, water infrastructure, housing).

Anand Rathi said, going ahead, the market is expected to grow at a similar pace, to around Rs 46,000 crore by 2022.

Drivers (the GST, e-way bill) and the greater awareness about quality products support a demand shift to the regulated sector, it added.

The brokerage feels product diversification and value addition are keys to growth.

While explaining it said Supreme is the most diversified, with operations in plastic pipes (agri, non-agri), furniture, industrials and packaging. On establishing a strong foothold in CPVC pipes, Astral has made a foray into adhesives, it added.

 

Among others, the research house assigned hold rating on Finolex Industries (price target at Rs 563), Wim Plast (target Rs 594). It continued its hold recommendation on Nilkamal (target Rs 1,495).

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Mar 28, 2019 01:16 pm

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