Accumulate Astral Poly; target Rs 302: Dolat Capital
Dolat Capital is bullish on Astral Poly Technik (APTL) and has recommended 'Accumulate' rating on the stock with a target price of Rs 302 in its November 5, 2013 research report.
November 05, 2013 / 15:14 IST
Dolat Capital's report on Astral Poly Technik (APTL)
"APTL Q2 FY14 revenue grew 27.3 percent to Rs 2,558 mn. APTL has demonstrated significant pricing power. We feel that ongoing investments in developing the brand will enable APTL to have the pricing power. Raw material cost rose 21.2 percent to Rs 1,758 mn. Rupee depreciation also impacted the raw material cost. Blended realisation increased 12.4 percent QoQ. Other expenditure stood marginally higher than estimated. Operating profitability was significantly higher than estimated due to expansion in gross margins.""Interest and depreciation were in line with estimates. Depreciation cost is set to rise following aggressive capex. APTL had an exceptional loss of Rs 102 mn. Due to rupee depreciation, APTL had a notional loss of Rs 183.5 mn at the end of Q2FY14. This is due to the debt outstanding and imported raw material bought for CPVC segment. Net profitability was better due to the percolating effect of gross profit.""APTL’s two new products - Bore Well Column pipes and Bendabale Composite pipes are getting good acceptance in the markets. Adhesives segment is doing well and is a better margin segment as compared to other plumbing products. Hosur plant is ready and is waiting for electricity connection.""APTL expects to get approval for Blaze Master in the current fiscal, a fire sprinkler product that is slated to be a ‘game changer’ for the company. The strong demand for plumbing systems from the replacement as well as new markets, coupled with ongoing capacity addition and increase in product offerings, augurs well for APTL."View: "We remain positive on the story from a long term structural basis. Considering that valuations have moved up sharply over the last six months, we feel that upside may be limited from the current levels in the short term. At CMP, the stock trades at 20.3x FY14E and 13.4x FY15E earnings. Considering its growth rate, first mover advantage, launch of new products with exclusivity and focus on enhancing distribution reach with brand awareness, APTL will remain on a growth trajectory. Fluctuation in USD / INR rate would continue to impact APTL and we have built in a loss of Rs 120 mn and Rs 50 mn in our estimates for FY14 and FY15 respectively. We reiterate our Accumulate recommendation with a price target of Rs 302 to trade at 15x FY15E earnings," says Dolat Capital research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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