Dolat Capital is bullish on Astral Poly Technik has recommended buy rating on the stock with a target price of Rs 1447 in its research report dated May 24, 2019.
Dolat Capital's research report on Astral Poly Technik
Astral Poly Technik (ASTRA) Q4FY19 results were lower than our estimates on profitability parameters. The profitability was impacted, due to one-off events, such as inventory loss (in both divisions – pipe and adhesive) and the Rex acquisition. We believe that inventory losses will be reversed to a large extent, as PVC prices have trended upward in 1QFY20. As the Rex acquisition cost is already reflected in the balance sheet, profitability should improve from the current level. The piping volume grew 23% YoY in Q4FY19, however, realizations were flat. ASTRA did not adopt the price cutting strategies of the other large players to gain volume. The adhesive segment was also impacted by the macro slowdown and high branding cost.
As the company has a high growth trajectory and expansion in return ratios, valuations will remain expensive. We reiterate Buy, with a target price of ` 1,447 (48x FY21E).
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