Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Posted On: 2020-11-26 00:23:40 (Time Zone: Arizona, USA)

Astral Poly Technik's (ASTRA) has made a big-bang entry into plastic storage tanks segment through acquisition of certain assets of Shree Prabhu Petrochemicals Pvt Ltd (SPPL) for Rs510mn. Besides access to SPPL's water tank capacity of 500mn ltrs and pipe capacity of 4,500te p.a., the acquisition would allow ASTRA to leverage SPPL's brand 'SARITA' and its existing dealer network. The acquisition seems very lucrative considering the high RoCE potential of the asset and payback period of just over two years. Key synergies: 1) leveraging of ASTRA's existing dealer network, 2) multi-location manufacturing footprint as water tanks are highly freight-sensitive products, 3) ready access to SPPL's technology, knowhow and dealer network for fast ramp-up.

- Valuation and outlook. Considering the potential revenue and profitability generation from the said acquisition, we increase our FY22E revenue and PAT estimates by 2% and 1.5% respectively. While rolling over our valuations to FY23E, we expect ASTRA to report overall revenue and PAT CAGRs of 18.5% and 31.7%, respectively, over FY20-FY23E. With the recent spurt in stock price, we downgrade ASTRA to ADD from Buy with a revised SoTP-based target price of Rs1,530 (earlier: Rs1,345), implying a P/E multiple of 45x Sep'22E earnings.

- Foray into water storage tanks to aid further scalability to company's strong model: ASTRA's acquisition of SPPL assets (including its brand 'SARITA', ready-made facility at Aurangabad and extensive network of 550 dealers) marks its seamless entry (without any gestation period) into the fast growing water storage tank segment. Its existing capacity of 500mn ltrs p.a. in tanks and 4,500te in plastic pipes has potential to generate revenue of Rs2.5bn in next 3-4 years with an estimated consolidated EBITDA margin of 13-15%. This would result into faster payback of just over two years and a potential accretion of Rs11bn (5% of current market cap) to its existing market cap over the next 3-4 years.

- Existing synergies and decentralisation benefits to aid scale-up of both its tank and existing pipe businesses: SPPL acquisition is expected to offer synergies, viz. 1) many ASTRA dealers are already into water tank business, 2) ASTRA already has multi-location plant advantage as water tanks are logistically heavy products, 3) ASTRA would be able to take advantage of SPPL's technology, ready-made capacity of 500mn ltrs p.a., knowhow (only player to manufacture storage tanks up to 5,000 ltrs) and dealership network, and 4) scale up its pipe business in the Maharashtra region by aggressively adding capacity and range of piping products at its acquired facility in Aurangabad.

- Water storage tank business offers decent scalability to ASTRA's existing model. Water storage tank market is worth Rs50bn and has been growing at 13-15% CAGR over the last five years. A large unorganised segment (70% of the current market) and weakening competitive intensity present a decent opportunity for branded players like ASTRA.

Shares of ASTRAL POLY TECHNIK LTD. was last trading in BSE at Rs.1451 as compared to the previous close of Rs. 1407.6. The total number of shares traded during the day was 13811 in over 1905 trades.

The stock hit an intraday high of Rs. 1460 and intraday low of 1408.65. The net turnover during the day was Rs. 19884341.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Maintain ADD on Symphony - Domestic in line; RoW improving - HDFC Securities

Maintain ADD on Multi Commodity Exchange - Taking a pause; recovery awaited - HDFC Securities

Maintain ADD on DCB Bank - Provisioning cushion emerges ahead of expectations - HDFC Securities

Maintain BUY on Birla Corporation - Margin buoyancy continues - HDFC Securities

ADD on SRF - Returning to normalcy - HDFC Securities

HDFC Securities - Maintain BUY on UltraTech Cement - Solid show!

Ajanta Pharma (Initiating Coverage) - Gearing for the next leap - HDFC Securities

BUY on SBI Life Insurance - Growth returns - HDFC Securities

Kajaria Ceramics (Initiating Coverage) - Galloping ahead - HDFC Securities

UltraTech Q3 FY21 - YES Securities

HDFC Life Q3 FY21 - YES Securities

SBI Life - Q3 FY21 - YES Securities

Aavas Financiers Q3 FY21 - Conference Call Takeaways - YES Securities

Birla Corp Q3 FY21 - YES Securities

ADD on Reliance Industries - Sailed through the tough times! - HDFC Securities

Grasim Industries - Aspiring for strong no.2 position in paints - ICICI Securities

Kewal Kiran Clothing - Better execution with flat EBITDA YoY - ICICI Securities

Mphasis - DXC will continue to be key in the near term - ICICI Securities

HDFC Securities: Indian Chemical Sector (Sector Update) - Steering well through the pandemic!

UltraTech Cement - Earnings upgrade continues; ripe for rerating - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - Q3FY21 - ICICI Securities

SBI Life Insurance Company - Strong performance, attractive valuations (<2 FY23 P/EV) - ICICI Securities

Biocon Limited - Slow recovery in biosimilars - ICICI Securities

HDFC Life Insurance Company - Not only - but also - about protection - ICICI Securities

DCB Bank - Gradually approaching normalcy - ICICI Securities

Aurobindo Pharma - Approval for 3 products under PLI Scheme - ICICI Securities

Yes Bank - Aggravating asset quality fears outweigh operating performance turnaround - ICICI Securities

JSW Steel - Peak margins expected in Q4FY21 - ICICI Securities

Aavas Financiers - Quality intact; premium to sustain - ICICI Securities

Supreme Industries - Q3FY21 First Cut - ICICI Direct

Polycab India Ltd - Q3FY21 First Cut - ICICI Direct

DCB Bank - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Symphony Ltd. - ICICI Direct

Ultratech Cement - Q3FY21 First Cut - ICICI Direct

Oberoi Realty - Q3FY21 First Cut - ICICI Direct

HDFC Life Insurance - Q3FY21 First Cut - ICICI Direct

SRF Limited - Chemical biz's good performance may continue - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - ICICI Securities

Q3FY21 Company update - Zensar Technologies - ICICI Direct

JSW Steel - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Biocon Ltd - ICICI Direct

Symphony Ltd - Q3FY21 First Cut - ICICI Direct

Crompton Greaves Consumer Electricals - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Bajaj Finserv - ICICI Direct

Q3FY21 Result update - Bajaj Auto - ICICI Direct

Quant Pick - Hero MotoCorp - ICICI Direct

Company update - Cyient Ltd - Q3FY21 - ICICI Direct

Covid Recovery Pulse - Auto retail taper off in new year 2021 - ICICI Direct

Q3FY21 Result update - Asian Paints - ICICI Direct

Company update - Mphasis Ltd - Q3FY21 - ICICI Direct

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020