If you have seen Dabangg 2 then you surely came across this multi-bagger stock famously known as ‘Dabangg pipes’ or ‘Salman wali pipe’. Yes, you are right we are talking to Astral Poly Technik the makers of Astral pipes.
One of the leading manufacturers of plumbing and drainage systems in India Astral Poly Technik has delivered a phenomenal return of 10,923% over the last ten years. The counter has rallied from Rs 19.95 on 3rd March 2011 to Rs 2,199 as of 2nd March 2021. The meritorious rise in the share has turned investments of Rs 10,000 in the company in 2011 to a whopping Rs 11.02 lakhs in 2021.
So, what has led to this rise? Well over the past decade net sales of Astral Poly Technik jumped almost 6 times to Rs 2,578 crores in FY2020 from Rs 411 crores in FY2011. While the profits after tax leapt 7.5 times from a mere Rs 33 crores to Rs 251 crores during the same period.
Whereas for nine months ended FY2021 (9MFY2021) it recorded a net sale of Rs 2,048 crores and profit after tax came in at Rs 238 crores. Even the promoters increased their stake from 38.20% in March 2011 to 55.74% in December 2020. Simultaneously institutional investor also added the stock into their portfolio as their shareholding increased from 1.09% to 30.24% during the same period.
Those numbers are quite impressive, but the company isn’t stopping here. For 9MFY21 the company has incurred a capex of Rs 87 crore including Rs 51 crore acquisition of water tank business in November 2020. Brownfield expansion in Hosur be completed by the first half of next year, while the other two plants in Orrisa and Dholka (for pipes & fittings and valve) will commence operation by the second half next year. This expansion will take companies current piping capacity from ~2.4 lakh tonnes to ~2.9 lakh tonnes by the end of FY2022.
At the same time, government thrust on infra spending such as Nal Se Jal scheme for the rural and urban population is likely to drive demand of pipe and fittings going forward. To capitalize on this demand the company has also planned a slew of new product launches for FY2022.
‘Over medium to long term piping segment volume growth for Astral is approximately 15%. This along with the newly acquired water tank business would also start aiding to revenue growth from Q4FY21 onwards. The adhesive business revenue growth guidance at 20% would largely be supported by dealer expansion in new geographies. We revise our earnings estimate up by 16%, 33% for FY23E considering improved growth guidance,’ said ICICI Direct in a report. The brokerage has maintained a hold rating due to the recent run-up in stock price.
Astral Poly Technik is undergoing a rebranding exercise and will be renamed Astral Ltd. The debt-free company has announced a bonus issue in the ratio of 1:3 which is subject to shareholder approval.
