Despite the 14 per cent correction in stock price, Astral Poly Technik
has outperformed the market by surging 59 per cent in the past three months, against 6.6 per cent gain in the Sensex in the same period. In the past six months, it has zoomed 112 per cent, as compared to 29 per cent risen in the benchmark index.
ASTRA is India’s fastest-growing (10-year revenue/EBITDA CAGR 22/24 per cent) plastic pipes producer (in the listed space). While the company has grown to become the fourth largest overall, it is among the two largest players in the high-margin (and faster growing) CPVC pipes and fitting segments.
Over the next three years, its growth visibility looks equally strong, driven by robust demand in piping segment and the company’s expansion in plastic tanks and valves businesses (both high-growth opportunities). These should drive its plastic segment revenue/EBITDA CAGR of 22/27 per cent during FY20-23E, in our view, analysts at HDFC Securities said in the initiate coverage report in February.
ASTRA’s superior capital allocation has resulted in strong revenue and earnings growth, as well as high return ratios. While earnings growth outlook remains buoyant, ASTRA’s stepping up asset sweating led free cash flow (FCF)/return ratio acceleration should further bolster its valuations.
“We like ASTRA for its leadership presence in the CPVC segment and continued traction in adhesive business. Aided by strong demand outlook in both businesses and ASTRA’s new product launches (tanks and valves in plastic pipes, newer chemistries in adhesives), distribution strengthening in adhesives, and focus on asset sweating, ASTRA’s revenue/EBITDA/APAT should grow at robust 24/29/35 per cent during FY20-23E (ahead of 24/27/24 per cent CAGR during FY10-20),” the brokerage firm said.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.