Astral Poly Technik - Q2FY21 Result Update - ICICI Direct

Astral’s Q2FY21 performance was better than our estimates led by strong recovery in both piping and adhesive segments. Piping demand (largely associated with construction activities) has started picking up from September onwards. Piping segment recorded ~30% YoY growth in September 2020 after ~90% recovery in July-August 2020. The adhesive business recorded sharp revenue growth of ~31% YoY led by pent up demand from tier II & III cities and streamlining of its distribution networks. EBITDA margin increased 168 bps YoY to 19.2% tracking a strong recovery in profitability of adhesive and piping segment. Finally, 7% increase in PAT at Rs. 88 crore was ahead our estimate of ~Rs. 70 crore mainly tracking better sales growth and margin expansion. The management commentary suggests a strong demand outlook, going forward, supported by re-opening of metro and tier 1 cities with improved margin profile (as high margin CPVC segment performance start improving from September onwards and the profitability of adhesive segment likely to remain strong going forward). We introduce FY23 estimates with revenue CAGR of ~15% in FY20-23E led by ~14%, ~18% revenue CAGR of piping and adhesive segment, respectively.

Valuation & Outlook

We revise our earnings estimate up 11%, 39% for FY21E considering improved sales. We believe a sharp growth in demand in October 2020 is a one-off event and demand is likely to normalise, going forward. We introduce FY23 estimates with revenue, earning CAGR of 15%, 19%, respectively, with margin profile likely to normalise, going forward. We roll over our valuation to FY23 with revised target price of Rs. 1250/share (valuing 45xFY23E) and maintain HOLD rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AstralPoly_Q2FY21.pdf

Shares of ASTRAL POLY TECHNIK LTD. was last trading in BSE at Rs.1284 as compared to the previous close of Rs. 1279.2. The total number of shares traded during the day was 2423 in over 220 trades.

The stock hit an intraday high of Rs. 1302.95 and intraday low of 1271. The net turnover during the day was Rs. 3130947.

Source : Equity Bulls

Keywords