Astec Life hits 52-wk high as ICRA reaffirms ratings, zooms 84% in 1 month

Shares of Astec LifeSciences hit a 52-week high of Rs 719, up 8 per cent on the BSE on Tuesday after the rating agency ICRA reaffirmed the long-term and short-term outstanding rating of Rs 455 crore line of credit (LOC) of the agrochemicals company. Godrej Agrovet, which is the promoter of the company, currently holds 61.18 per cent stake in the company.

In the past month, the stock has zoomed 84 per cent, as compared to a 2.4 per cent decline in the S&P BSE Sensex. It was trading close to its all-time high level of Rs 783 touched on June 2018.

“The reaffirmation of ratings factors in the established track record of Astec LifeSciences(Astec) in the manufacture of Triazole fungicides (technical grade), its reputed clientele and backward-integrated operations. The ratings note Astec’s strong parentage and financial flexibility that it enjoys as a part of the Godrej Group,” ICRA said in a rating rationale.

Astec has demonstrated a healthy performance during FY2017 to FY2020, as reflected by nearly 26 per cent compounded annual growth rate in its revenues, which was primarily driven by exports. ICRA notes that the domestic agrochemical industry has benefitted from the global supply-chain disruptions caused by the tightened environment regulations in China, which is one of the largest producers and exporters of agrochemicals globally.

Furthermore, the industry is likely to benefit from a further shift of input sourcing from China with the recent events related to the Covid-19 pandemic. With Astec’s established track record and long-term relations with some of the established multinational companies and the ongoing capital expenditure (capex) plans for augmenting its capacities, it is expected to benefit from such opportunities, it added.

For the January-March 2020 quarter (Q4FY20), Astec’s profit before tax (PBT) nearly doubled to Rs 39.63 crore against Rs 20.22 crore in the same quarter last fiscal. Revenues from operations jumped 35 per cent year-on-year (YoY) to Rs 180.57 crore from Rs 133.76 crore in the previous year quarter.

Astec’s total debt of Rs 99 crore outstanding as of March 31, 2020, was lower than Rs 176 crore as of March 31, 2019, primarily due to favourable credit terms availed by the company for its imports. Its interest coverage improved to 7.8 times in FY2020 (adjusted for IND AS 116 impact; 7.7 times as per reported financials) from 6.9 times in FY2019, supported by healthy revenue growth and relatively low-interest costs.