We had recently posted about Astral Polytechnik Ltd. (APL). We had discussed about the shift taking place in the Indian plumbing market from GI Pipes to CPVC and Astral’s leadership position in the same. The feedback and further research on this stock has been remarkable.
Our friend – Donald Francis, made a company visit and had a Management Meet to get a better understanding. Few highlights:
We see us growing at 30-35% CAGR for the next few years. If we execute well, a Rs. 1000 Cr turnover is achievable within the next 3 years.
We are looking to expand to 70,000 MT by this year end.
The availability of the CPVC compound (other than Lubrizol) is a key constraint.
Please check out the complete report (requires free login) to get a in-depth understanding of the company and the potential ahead.
Key Takeaways from his meeting:
- The opportunity for the CPVC players is huge as the acceptance and usage of CPVC is increasing fast in the plumbing industry.
- As the CPVC compound is restricted (only 3 licenses have been given by Lubrizol in India), Astral will continue to have a advantage.
- The company targets to grow @ of 30-35% for next few years.
- New products being developed for launch – Blazemaster etc have high potential and Astral will enjoy an exclusive period for them.
- The company already has sufficient land space to carry out expansions for next 2-3 years. Astral plans to increase capacity from currently 45,000 MT to 70,000 MT by year end.
- Company aims to maintain operating margins in the range of 13-15% on an annual basis.
The stock has remained quite firm and has been steadily rising despite lot of weakness in the overall market. We feel that with more discussion and discovery of the stock and potential ahead, it may continue to do well. Its not easy to come across stock ideas having products with strong growth visibility. One should continue to hold the stock and accumulate on declines.
Management Meet with Astral Polytechnic [ Thanks to Donald via Valuepickr]
10 thoughts on “Astral Polytechnik–Management Meet”
Here is one nice blog
Hi, I have been watching this company and see that its in a good business, below book value, good set of results, low PE. Have i missed any of their drawbacks. Can you please advise me on this company Venus Remedies
There are lots of doubts on the quality of earnings of Venus Remedies. Like Venus Remedies, there are some more cos like – Ind Swift Lab, Ind Swift Ltd, Surya Pharma etc which have been posting good nos but there is lot of doubt about these cos. Hence market have been giving low valuations to them.
If one is to pick a pharma co among this pack, then one may go for Ind Swift group.
What does ‘quality of earnings’ mean? Their numbers do look good but is there anything I am missing in numbers?
As per my analysis, the main issue with the stock is low promoter holding (~21%) out of which about 70% is pledged.
Also, the issue with FCCB, though resolved now, is a small negative factor.
Any idea about management?
By “quality of earnings” I mean the reliability of the nos and promoters.
Somehow things don’t inspire much confidence. Have a look at Ind-Swift lab in the same category…wherein I feel things might be better.
Any updates on the latest results and foreign exchange losses ?
The co has done really well in terms of topline growth…soon they would be crossing 1000 Cr turnover mark! The forex losses were expected due to the rupee weakening and hence may be considered sort of extra-ordinary.
But how will co recoup these foreign exchange losses.Can it do so by increasing the price proportionately ? In thiis aspect how its competitors like Ashirwad and ajay faring ?These losses are a worrisome part.
By increasing product prices…they have been increasing them gradually.
I don’t think these losses will repeat until inr starts depreciating again.
The uncertainty leaves a bad taste . The company shud come out with clear policy on the foreign exchange issue as it will be a source of constant worry for them. Any idea n check with dealer network on how ajay n ashirwad are dealing with this issue