ICICI Direct recommended Hold rating on Astral Poly Technik with a target price of Rs 1275 in its research report dated October 29, 2019.
ICICI Direct's research report on Astral Poly Technik
Astral reported consolidated revenue growth of 9% YoY in Q2FY20 slightly lower than our estimate mainly on account of a decline in revenue of adhesive segment by ~10% YoY. However, piping segment (standalone) recorded strong revenue growth of 14% led by volume growth of ~17% YoY (including Rex, volume growth was higher at 27% YoY). The strong volume growth came on the back of strong demand of CPVC, PVC pipes along with ~8% YoY price hike in the CPVC pipe category. The management guided for strong volume growth in the piping segment (I-direct estimate: volume CAGR of 22%) for FY19-21E led by higher plant utilisation of Rex business and sustained demand of plumbing pipes. With EBITDA margin in the range of 15-16%, we believe Astral will record strong PAT CAGR of ~35% in FY19-21E.
We model revenue, earning CAGR of ~22%, ~35%, respectively, in FY19-21E led by volume growth, recovery in EBITDA margin. Though we believe in strong fundamentals of APTL coupled with intact demand outlook (led by government push on housing & infra sectors), the current price discounts all near term positives. We maintain HOLD rating on the stock.
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.