Astral Poly Technik extends fall as stock turns ex-bonus in ratio of 1:3

Shares of Astral Poly Technik, on Thursday, fell 8 per cent to Rs 1,701 on the BSE in intra-day trade on profit booking after the stock turned ex-bonus in ratio of 1:3 i.e. 1 bonus share for every 3 existing equity shares. The company engaged in plastic products business has fixed Friday, March 19 as the record date for the bonus share issue.

The stock was trading lower for the third straight day, falling 14 per cent from its record high of Rs 1,987.50 (adjusted to bonus issue) touched on Monday, March 15. At 10:18 am, it was quoting 3 per cent lower at Rs 1,789, against 0.56 per cent risen in the S&P BSE Sensex. A combined 218,000 equity shares were changing hands on the counter on the NSE and BSE.

Despite the 14 per cent correction in stock price, Astral Poly Technik has outperformed the market by surging 59 per cent in the past three months, against 6.6 per cent gain in the Sensex in the same period. In the past six months, it has zoomed 112 per cent, as compared to 29 per cent risen in the benchmark index.

ASTRA is India’s fastest-growing (10-year revenue/EBITDA CAGR 22/24 per cent) plastic pipes producer (in the listed space). While the company has grown to become the fourth largest overall, it is among the two largest players in the high-margin (and faster growing) CPVC pipes and fitting segments.

Over the next three years, its growth visibility looks equally strong, driven by robust demand in piping segment and the company’s expansion in plastic tanks and valves businesses (both high-growth opportunities). These should drive its plastic segment revenue/EBITDA CAGR of 22/27 per cent during FY20-23E, in our view, analysts at HDFC Securities said in the initiate coverage report in February.

ASTRA’s superior capital allocation has resulted in strong revenue and earnings growth, as well as high return ratios. While earnings growth outlook remains buoyant, ASTRA’s stepping up asset sweating led free cash flow (FCF)/return ratio acceleration should further bolster its valuations.

“We like ASTRA for its leadership presence in the CPVC segment and continued traction in adhesive business. Aided by strong demand outlook in both businesses and ASTRA’s new product launches (tanks and valves in plastic pipes, newer chemistries in adhesives), distribution strengthening in adhesives, and focus on asset sweating, ASTRA’s revenue/EBITDA/APAT should grow at robust 24/29/35 per cent during FY20-23E (ahead of 24/27/24 per cent CAGR during FY10-20),” the brokerage firm said.