Accumulate Astral Poly Technik; target of Rs 530: EIS

Astral Poly's standalone top-line grew by 16% to Rs 3171.5 Mn. The sales growth came on account of 21.2% growth in sales volume to 19,355 MT. Sales performance was more or less in-line with our estimate. A hit in realization was due to CPVC raw material price drop and fall in crude prices which hurt the overall growth.

 

Astral had been witnessing  subdued performance in recent times due to steep fall in polymer prices and slowing economy. A late reaction by Lubrizol in cutting CPVC RM prices hurt the growth prospect. But new strategic tie-up with Japanese player Sekisui for CPVC resin procurement and backward integration for converting resin to compound are expected to improve margins Q3FY17 onwards. With polymer prices stabilizing, Astral has started taking small price hikes in PVC businesses. Besides fundamentally strong pipe business, its newly acquired subsidiaries in adhesive & sealant businesses promise a great future on account of several synergies with Astral and almost doubling the capacity of adhesives during FY17. Incorporating better future we have slightly upgraded our FY18 projections and our SOTP based target price is now Rs 530 per share. After some recent run up, the stock still offers 10% upside from current level. Thus, we maintain our Accumulate rating on the stock of the company. For all recommendations, 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.