Hold Astral Poly Technik; target of Rs 1120: ICICI Direct
ICICI Direct recommended hold rating on Astral Poly Technik with a target price of Rs 1120 in its research report dated August 06, 2020.
August 10, 2020 / 01:03 PM IST
ICICI Direct's research report on Astral Poly Technik
Astral’s Q1FY21 performance was better than our estimates despite sales loss for almost 45 days amid lockdowns. While April 2020 was a washout month, the piping business reported a month on month improvement in volume with June 2020 volume recovering 96% YoY. Piping segment’s volume de-growth of 31% YoY in Q1FY21, was better than our estimate of ~44% decline. On the adhesive front, revenue fell 37% YoY (better than our estimate of 56% YoY decline). However, it saw a substantial recovery in sales on a month on month basis. Sales in July 2020 were up 26% YoY. A sharp fall in other expenditure (down 49% YoY) was on the back of the company’s cost optimisation measures that helped restrict fall in EBITDA margin by 164 bps YoY to 13.4%. Finally, ~58% fall in bottomline to Rs 20 crore was much ahead our estimate of Rs 7.5 crore. While the management refrained from giving any volume guidance for FY21 (considering the intermediary lockdowns), we believe a pick-up in construction activity would help in a faster recovery in sales for both segments from H2FY21E onwards.
We revise our earnings estimate up 5%, 16% for FY21E, FY22E considering improved sales. Though we maintain our positive stance on the stock, a delay in construction activity would lead to a slow recovery for Astral, going ahead. We maintain our HOLD recommendation on the stock with a revised target price of Rs 1120/share.
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