Hold Astral Poly Technik Ltd - Nirmal Bang

CMP: Rs 560
Target Price: Rs 679

Recommendation: HOLD
Astral reported Q1FY14 numbers below street expectations. Though Net sales for the quarter grew 42% YoY and were above expectations at Rs.216 crore on the back of higher volumes; however EBIDTA margins fell nearly 291 bps YoY due to higher raw material cost as a result of rupee depreciation. Adjusted PAT came in 5% higher YoY at Rs.11.8 crore. The company increased its production by 22% YoY to 13122 MT during the quarter with a utilization of 68%. Astral has grown a CAGR of more than 40% for the past 7 years. Company has continuously expanded its capacity and brought in a lot of newer products in the market. With similar endeavor to continue in the coming years with the launch of newer products like Blazemaster, Column Pipes, Solvent Cement we believe Astral would continue to grow its topline at a steady pace, though we remain cautious on the margin front.

At CMP, the stock is trading at a P/E of 15x and 12x its FY14E and FY15E expected earnings respectively. We continue to be positive about the company and recommend investors to Hold and Buy the stock on declines with a long term perspective.

Source : Equity Bulls

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