Dolat Capital Market has given Accumulate recommendation for Astral Poly Technik with a target price of Rs. 2146 in its research report issued on Feb 04, 2021
Dolat Capital Market’s research report on Astral Poly Technik
Astral Poly Technik (ASTRA) Q3FY21 numbers were above our estimates on revenue front and profitability front. Volume growth of 15.1% YoY and 4.3% QoQ in pipe segment with opening up of metro cities and company had inventory ready and robust distribution network. Pipes business showed a positive growth YoY from Sep’20 onwards. Adhesive segment from the month of July showed a positive growth and the growth story has continued with positive response. Margins on a full year showed growth as structural changes of eliminating stockists was undertaken. Stockist margins of 6-8% was removed which directly benefited the Company. Growth was seen in adhesives business as structural changes were completed which led to higher margins. ASTRA has plans for expansion and have acquired adjacent land at most of their plants for expansion purposes. To have a pan India presence they acquired a land in East India. In FY21, they will not be heavily spending on branding activities. We believe that these are investment phases and ASTRA will reap long term benefits of these strategies for prolonged periods atleast for the next 5 years. With new product addition in the Adhesive segment as well as pipe segment, we feel that revenue growth along with margin profile should get better and management has guided to achieve margins of 15-16%.
With high growth trajectory and expansion activities in place, valuations will remain expensive. Maintain Accumulate with a target price of Rs 2,146. (78x FY23E).