Astral Ltd. share price target

Despite demonetization and change in Astral's raw material (CPVC pipes) tie-up with Lubrizol, revenue increased 12% led by 12% volume growth in pipes (75% of revenue) and 11% growth in adhesive division (25% of revenue). Cost savings as Astral backward integrated to make its own CPVC compound coup..

revenue/EBITDA/PAT was up 9.2%/57.2%/61.2% YoY to Rs4.5 bn/634 mn/346 mn. Plastic division's volume increased 12% YoY to 20,852mt with flattish realization growth. Adhesive business reported a strong 12% revenue growth led by strong growth at Resinova. The company started producing its own composite plant in association with Sekisui Chemicals which has resulted in lower raw material cost and higher margin. The management has guided for 15-20% volume growth from FY18 onwards with higher margin. Due to demonetization, we are cutting our EBITDA/PAT estimates by 4%/8% for FY17 and 5%/8% for FY18. We expect revenue/earning CAGR of 17%/28% in FY16-18E. We are...

Muted EBITDA performance (up 8% YoY) at Rs 565 mn in Q2 was largely due to one-off [Astral changed its raw material (CPVC pipes) supplier]. Astral backward integrated to make its own CPVC compound by using resin from Sekisui, Japan and launched its own CPVC pipe brand Astral CPVC Pro.

Astral Poly Technik Ltd. (Astral) came out with mixed results where revenue was marginally above expectation while EBITDA and PAT was a tag lower than estimates. In Q1FY17, Consolidated revenue/EBITDA grew by 16.7%/8.5% YoY to Rs5,205mn and Rs546 mn, respectively (below our estimates) while adjusted PAT (adjusting forex loss of Rs36 mn) came at Rs303 mn, up by 3.7% YoY due to higher depreciation and interest expenses. EBITDA/Adjusted PAT margin declined 98/90bps YoY to 13%/7.2% respectively due to lower gross margin and higher employee cost. The company reports strong 16% YoY growth in pipes revenue led by 21% rise in volume partially offset by 4.3% drop in realization due to lower CPVC prices. Adhesive business witnessed a growth of...

One of the largest beneficiaries of the shift from metal to plastic pipes:Astral Poly Technik Limited (APTL) is one of the leading manufacturers of Poly Vinyl Chloride (PVC) and Chlorinated Poly Vinyl Chloride (CPVC) plumbing systems for both residential and industrial applications. It enjoys market share of more than 40% in domestic CPVC and PVC piping industry. APTL is one of the largest beneficiaries of industry shift from metal to plastic pipes owing to durability and free from corrosion. The transition from unorganized (~ 40% of the total) to unorganizedproducts would also help the company to gain market share.