Astral Poly: Management meet

We had recently mentioned about our trip to Gujarat and company visits there. Here is the detailed update on Astral Polytechnik.

We had first mentioned about this company in March, 2011. Since then the stock has done very well, rising from Rs 120 to 300 and we feel that it still has a good potential over a longer term. Here is a summary of the past track record of the company:

The company has had a fantastic growth – it has grown its turnover from hardly 13 Cr in 2003 to 578 Cr in 2012. We feel that the conversion from GI Pipes to CPVC is still catching up and hence the potential is still big enough and with the development and introduction of new products, company can continue with 25-30% growth rates for next few years. The stock may look fairly priced based on PE ratio but if one removes the forex losses (which are one time in nature), the stock is still reasonably priced, looking at the long term growth potential. Company is also focusing on creating a national brand.

Here are few excerpts from the management meet:

We have 4 products licensed from Lubrizol. Flowguard, CORZAN, Blazemaster and Bendable. Ashirwad & Ajay have only the Flowguard license [who are the Astral’s closest competitors].

We have about 300-350 distributors. All the states put together, no of dealers will be 9000-10000.

Project Sales are handled by Distributors with some 8-10% margins. Support is provided by the company for Project Sales.

We continuously try to interact & educate Focus groups. Consultants, Architects and Builders for Project Sales and Plumber Groups for Retail Sales.

We are happy to achieve a 25-30% growth rate consistently and at 12-14% sustainable EBITDA margins.

Astral’s new products – Blazemaster & Bendable pipe hold good potential. Co would be having exclusivity for few years.

Despite the 20% depreciation in currency and the M2M loss, the cost of Forex Loan over its full tenure will work out cheaper than our domestic rupee loans.

In 2007, we were preparing for an addressable market (ours) of 1000 Cr. We are now preparing the plants for addressing a market of 2000Cr.

We have been building up the Astral brand with our target customer base – Plumbers, Architects, Consultants, Builders/Project segment. We will next attempt on educating the CONSUMER directly. There are some mass media events planned in October/November timeframes.

Please check out the complete management interview (requires free login)

Summary:

For those already invested into the stock, it seems to be a good long term compounder and hence one should try remaining invested and try to increase exposure on corrections. For new investors, one should definitely study it and make it a part of portfolio and accumulate on sharp declines.

  • Shiva

    I am having some login issues with Screener. It is not allowing me to log in even after inputting the correct password. I reset the password again but with little effect. Am I the only one facing this problem?

    • I am not having the same issue you are getting.

    • We have re-tuned the servers. Might had been a temporary issue. Should work fine now.

      • Kushal Dalal

        Pratyush,

        I was looking for one of the stock and the data seems wrong.
        The script was Arshiya International.

        Kushal

        • Ayush

          Please share the details of the mismatch.

          • Kushal Dalal

            It says PE of 5.48 and book value of 152. I checked in money control and other site and it is not correct.

          • Hi Kushal,

            In Screener we also take in the effects of latest quarterly results. Thus PE and Book Value calculated is latest (considering latest quarters too).

            In June Quarter the company earned a Net Profit of 34 Crores (vs 23 previous year), thus it lowered the PE and increased the book value.

            Hope that helps.

          • Ayush

            Screener automatically picks the consolidates results if they are more relevant and hence that might also be the difference

          • Kushal Dalal

            Thanks
            Kushal

  • Ayush,

    Are you tracking Premier Explosive?

    Kushal

    • Ayush

      Hi Kushal,

      Haven’t been tracking the same but had a quick look. It does has some good ratios and looks cheap but its important to know about the growth prospects otherwise re-rating might not happen. Any insights at your end?

      • Mallikarjun

        Hi Ayush
        Keltech has good Roce n inventory turnover than Premier explosives.. And Solar Industries has existed premier explosives.. Few months back they had some stake in premier..

      • Ayush,

        Just looking to screener for some criteria and found this company.
        Started reading their ARs and if i find something i will update you.
        I heard that they have some accident at their facility 3-4 months back and the production was stopped for some time and then recently i read in BSE that they have informed that it is restarted.

        I found this value pick has recommended it before some time.
        http://value-picks.blogspot.com/2012/07/premier-explosives-ltd-buy.html

        Kushal

  • Naveen

    Hi Ayush,
    I was just checking on to Gushan Polyols which was suggested by Amit. I dont see any good results other than the last one but the client list is very good and they are also performing better. Any updateds with their Indus Spririts or any new development in th company.
    Appreciate your views in this comapny
    Regards
    Naveen

    • Ayush

      Hi Naveen,

      Gulshan Poly has been doing well consistently and looks undervalued at these prices. Not aware of the status of their spirits venture.

      Please share the link where Amit has discussed this stock.

  • Mallikarjun

    Hi Ayush
    Keltech Energies & National Peroxide seems interesting. Waiting for your views
    thanku:-)

  • Ayush

    Not too much idea about the promoters. But do go through their FY 12 annual report…i have annotated and highlighted a copy and shared at – http://www.screener.in/company/?q=532457#docs

    They claim to be having some major market share in some of the areas.

  • Suresh

    Dear CA Ayush. Zylog systems have fallen from Rs 227 to Rs 149 in a week’s time, which is its 52 week low. ‘G’ factor of this company is 8. Any specific reason for the crash. Is it advisable to buy at these levels? Regards, Suresh

    • Ayush

      Hi, we don’t track this co hence not much idea but would advice caution in such cases unless one knows the co very well.

  • nikhil

    hi Ayush,
    what is your take on granules india ?

    • Ayush

      Sorry, don’t track the same

  • Sreekanth

    Hi Ayush your sense on Q2 numbers for Manali Petro? Also what is your opinon on HSIL? i felt latest nos of HSIl looked good despite the constraints of the container glass industry..

    • Ayush

      The nos are decent and the stock seems undervalued at these levels.

      • DeepakkumarPrasad

        Ayush, Is this your response for Manali petro or HSIL

        • Ayush

          Manali Petro

  • DeepakkumarPrasad

    Screener does not Provide user created financial ratio under Quick
    Quick Ratios Lookup: for any share

    • Hi Deepak,

      I checked at our end and it shows our created financial ratios in quick lookup. Can you please tell the particular example which doesn’t show up?

      Thanks,
      Pratyush

      • DeepakkumarPrasad

        Hi Pratyush,

        I actually meant the financial ratio created by other users cannot be added to my quick loop . For example I want to create a ratio “Price to sales=Market cap/ sales” the website does not allow me to create because this is already created by public user.

        Now I cannot add this financial ratio “price to sales ” to my account quick lookup page.

        The deadlock here is I cannot create ratio “price to sales” nor I can use the one created by other public user.

        – Deepak

        • Hi Deepak,

          I got the issue. The problem is cause of moderation of public ratios created by users. We are in process of improving the public ratios moderation/creation system. That should fix this problem. For the moment, I have filed the above ratio of “Market Cap to Sales”.

          Thanks for the feedback,
          Pratyush

        • We have fixed this problem completely now.

  • Kushal Dalal

    Ayush,

    Do you track Gujarat Intrux? I was checking screener and it came under the new tab of undiscovered low PE and looks cheap.

    Thanks
    Kushal

    • Ayush

      It does look interesting on the nos. However in past I have tracked this co and it is a bit cyclical and lacks on quality parameters.

  • GreyCells

    Ayush

    This is fantastic site. You opened my eyes about investing. It was good discussing with you during our trip to Pune. Looking to change my investment style and contributing on your blog.

    Its better to have few convinced stock rather than momentum/khabari/temporary stock in the portfolio.

    Thanks
    Amol Chavan

    • Ayush

      Hi Amol,

      Thanks for the appreciation 🙂 And thanks a lot for the ride to Pune.

      Do check out our other site – screener.in too and help us in spreading the word.

      Ayush

  • DeepakkumarPrasad

    Sree Rayalaseema Alkalies and Allied Chemicals has popped up under low PE stock. Looks good when compared to sales, book values etc ….. If you can provide your views

    • Ayush

      We have followed this co for sometime and though it looks cheap on the statistical valuations but we felt that the quality of the co is poor and gave it a go for long term. It does trade cheaply and has potential to give returns over medium term though.

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  • Any updates on co front on Blazemaster n it’s impact on co top line n bottomline

    • Ayush

      No updates apart from rumors we keep hearing.

      • What are those rumours ? HSBC recently increased its stake in the co to 10%. Do u know of any other institutional or HNI investor in the co?

        • Ayush

          I think westbridge capital was also a major investor in the co, however can’t locate their name in shareholding pattern > 1%

          • Hdfc recently bought 1.5 lacs shares. Co closes this year with 950 cr vs 650 Cr last year. Target for next year is 1500 Cr. Blazemaster first sale in north has been done.there was a recent forced selling of 1 lacs shars by a HNI resulting in low prices. Any more updates.

          • Ayush

            Vivek, you are already providing the updates 🙂

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