Real Estate/Construction sector is a huge area in India and the potential going forward is enormous. Plumbing and clean water transportation is a very important area and crucial part of a construction project. Repairing of plumbing work is a very troublesome and costly affair and hence one won’t compromise on this front.
The plumbing industry in India is undergoing a smart change. Earlier, GI Pipes used to dominate the market but now PVC and CPVC pipes are fast replacing the GI Pipes. CPVC resin is most hygienic compound for water transportation and is resistant to corrosion. Hence as awareness and quality consciousness is increasing, more and more people are adopting CPVC pipes for plumbing needs.
Lubrizol (earlier B F Goodrich a Fortune 500 Company, USA) has been a leader in development of CPVC and they hold the patent for the same. Astral Poly is the first licensee of Lubrizol of USA and have a techno-financial joint venture with Specialty Process LLC of USA.Company has done really well over the last 5 years and has grown at a CAGR of almost 50%. The company has a first mover advantage in India and the competition might remain limited.
Snapshot of their performance:
For FY 2011, the gross sales should cross 400 Cr mark and the capacity should increase to 45,000 MT (was expected to come up by Dec 2010 end).
Future growth prospects:
Looking at the product potential, the market potential seems big enough for this company and hence one may expect growth rates in the range of 20-25%+ for next few years. Also, the company has been aggressive to keep introducing new products and take them PAN India. During this year company would be introducing Blazemaster Fire Sprinkler System and Manhole Inspection Chambers.
Valuations at CMP of 122:
- For 2011, company is expected to do a turnover of 380 Cr vs 300 Cr last year.
- Stock is trading at about 9 times expected FY 2011 earnings.
Looking at the growth prospects it seems to be a very interesting long-term investment. Please post your views in comments regarding the company.
Astral Poly Technik Financials: