Accumulate Astral Poly Technik - Dolat Capital

APTL continues its strong growth led by superior product quality and characteristics. The current trend in the construction & real estate segments would bolster the demand of APTL products. APTL has license for four products from Lubrizol which puts APTL at a competitive advantage.

- APTL is aggressively expanding its dealer network to increase its presence across the country. The brand enhancement program would improve the product perception.

- APTL started production of bendable composite pipes with technical support from Lubrizol in May 2012. APTL expects to get approval for Blaze Master in the current fiscal, a fire sprinkler product that we believe has the potential to be a 'game changer' for the company.

- The strong demand for plumbing systems from the replacement as well as new markets and increase in product offerings augurs well for APTL. Increased product range enables APTL to act as a one stop solution provider for plumbing requirements.

- Continuous capacity addition at low incremental cost would enable APTL to cater the strong growth rate as well as improve the return ratios.

- At CMP, the stock trades at 13.8x FY13E and 10.4x FY14E earnings. Valuations are on the higher side and cap any significant outperformance in the short term. However, considering the growth trajectory and ability to protect return ratios (ROE @ 27%); we feel that story is structurally good from a long term perspective. We have a target price of Rs.401 to trade at 12x FY14E earnings.

Source : Equity Bulls

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