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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.