Dolat Capital recommended accumulate rating on Astral Poly Technik with a target price of Rs 1058 in its research report dated August 05, 2020.
Dolat Capital's research report on Astral Poly Technik
Astral Poly Technik (ASTRA) Q1FY21 numbers were in line with estimates on revenue front. Volume de-growth of 31.3% YoY and 5.5% QoQ due to lockdown situation, major volumes lost in Tier 1 cities as construction activities were stalled. As adhesives business falls under non-essential category the plants started operations later in May affecting the business. Adhesive segment in the month of July showed a positive growth after a subdued previous quarter. Margins on a full year showed growth as structural changes of eliminating stockists was undertaken. Stockist margins of 6-8% was removed which directly benefited the Company. The structural changes are completely complete now. ASTRA has plans for expansion and have acquired adjacent land at most of their plants for expansion purposes. To have a pan India presence they acquired a land in East India. In FY21, they will not be heavily spending on branding activities. We believe that these are investment phases and ASTRA will reap long term benefits of these strategies for prolonged periods atleast for the next 5 years. With new product addition in the Adhesive segment as well as pipe segment, we feel that revenue growth along with margin profile should get better once the economy is on recovery track.
With high growth trajectory and expansion activities in place, valuations will remain expensive. Maintain Accumulate with a target price of Rs 1,058. (55x FY22E).
For all recommendations report, click here
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.