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Research
Astral Poly Technik Ltd - Passing on costs to sustain margin - Networth
Posted On : 2012-08-21 20:43:01( TIMEZONE : IST )
Q1FY13 Operational Highlights
Revenue growth above expectation
Astral Poly Technik Ltd reported decent revenue growth of 52% yoy which was above our expectation driven by 42% growth in volume at 10,789MT and better realization growth of 6%.
Profitability improved on price hike
EBITDA margin improved by 58bps on account of better realization driven by the pass through of rise in raw material prices due rupee depreciation. Net profit growth was lower than operating profit on account of forex loss of Rs 22mn. MTM loss for the quarter is at Rs 123.5mn for outstanding foreign currency borrowings. This loss will be taken in P&L statement in FY13 based on prevailing exchange rate.
New product ensures growth sustainability
The company derives growth by regularly launching new products together with expanding its presence across geographies. The company has successfully commissioned its new facility in Ahmedabad taking the cumulative capacity to 65,496 MTPA. It has also started selling its manufactured solvent cement for PVC. However CPVC solvent cement is still imported from IPS and production to kick in from 2HFY13E. It launched Bendable CPVC in May 2012 while its BIS Certifications are pending for its products under the brand Blazemaster.
Valuation:
We have recently rolled over our projections to FY14 post our management meet. Presently the stock trades at 10.1x FY13E and 8.2x FY14E earnings. We are bullish on the long term prospects of Astral Polytechnic in view of wider acceptability of its products reflected in the revenue growth, product pipeline in the offing and last but not least the sustained pricing power for CPVC products it carries. However, in the short term we remain concerned about the company's ability to maintain margins in the wake of adverse INR/USD movement.
We have revised our target price to Rs 264, valuing the stock at 9x FY14E EPS (Earlier 7.5xFY13E EPS). We recommend our clients to Accumulate the stock.
