Hold Astral Poly Technik; target of Rs 935: ICICI Direct

ICICI Direct's research report on Astral Poly Technik

Astral poly Technik Ltd (APTL) has acquired 100% stake for | 147.5 crore (51% will be paid in Cash and 49% will be by exchange of APTL shares) in Rex Polyextrusion Pvt Ltd (“Rex”), an India based corrugated and other plastic pipe manufacture. Incorporated in 2006, Rex products range includes DWC Pipe (double wall corrugated), PVC suction and discharge Hoses, Single wall corrugated pipes suitable for underground sewerage drainage applications.

Outlook

We believe, the acquisition of Rex would be value accretive in the long run with the increase in capacity utilisation (~45% capacity utilisation in FY18) and control over working capacity (in standard with APTL). Considering the EPS accretive acquisition of Rex, we have increased our revenue, earning estimates by ~6%, ~4% for FY19E and ~8%, ~6% for FY20E respectively. We revise our target price from | 885 to | 935 with Hold rating.