Astral Pipes has not performed well in the last one year but for long-term investors, this stock has delivered a stellar return to its shareholders despite shedding heavily in the last one year. In the last 10 years, Astral share price has surged from Rs 25.75 to Rs 1,632.60 apiece levels on NSE, logging a more than 6,000 per cent rise in this period.
In the last one month, the price of each share of Astral has come down to Rs 1,612 from Rs 1,632.60. In other words, Astral has witnessed a five per cent decline in the stock market during that period. In YTD time, Astral share price has gone down from Rs 2,332 to Rs 1,632 levels, logging around 30 per cent slide in this period. In last 6 months, this stock has gone down from Rs 2,265 to Rs 1,632 levels, clocking around 28 per cent dip in this period. However, in last one year, Astral share price has gone down from around Rs 1,950 to Rs 1,632 levels, descending around 16 per cent in this period.
Currently, the company is in focus as it has subscribed to Optionally Convertible Debentures of Rs 194 crore allotted by Gem Paints, and has appointed majority directors on the board of Gem Paints, and Esha Paints. Accordingly, Gem Paints and Esha Paints have become a subsidiary and step-down subsidiary of the company respectively.
In the last 5 years, Astral share price has ascended from around Rs 415 to Rs 1,632 levels, logging around 290 per cent rise in this period or CAGR of around 31.50 per cent to its loyal shareholders who remained invested in the stock throughout this period. Similarly, in the last 10 years, this multibagger stock has ascended from around Rs 25.75 to Rs 1,632.60 apiece levels on NSE, logging around 6,000 per cent rise in this period or delivering 51.43 per cent CAGR (compound average growth rate) or annualized return to its shareholders who remained invested in Astral shares throughout the last 10 years. So, if an investor had invested Rs 1 lakh in this multibagger stock 10 years ago and had remained invested in this stock throughout this period, its Rs 1 lakh would have turned to more than Rs 63 lakh today.
Why Are Analysts Bullish?
Despite a profitability drag in the fourth quarter, analysts are bullish on Astral’s prospects due to several reasons. First, the demand for pipes is expected to jump due to a pick-up in construction activities and government emphasis on infrastructure. Second, the EBITDA is expected to improve in 2023-24, supported by a better product mix. Third, the company has also acquired a 51 per cent stake in Gem Paints, which has a strong presence in south India. It will help scale up Astral’s paints business and enable it to enter additional geographies. Fourth, the company has undertaken Rs.1,000 crore of capex in the past five years, mostly for increasing manufacturing capacity. Its stock is trading at premium valuations in terms of a 12-month forward PE ratio of 57.1 times compared to the BSE Industrials Index and BSE Sensex at 22.8 and 19.9 times, respectively.
Should you Invest?
Axis Securities, in its June top stock picks, has included Astral Ltd in the ‘Buy’ basket. The report said “Astral has reported volume growth of 10 per cent in the piping segment which is the highest among peers in the last 4 years, reflecting that Astral is gaining market share. Astral is maintaining EBITDA margins of 17.8 per cent despite taking a hike in realizations as commodity inflation is denting the profitability of the industry.” Furthermore, Astral’s foray into Valves, Resins, Sanitary ware, and Tanks would add revenue growth in the upcoming years, the report mentioned.
Speaking of financials, Astral reported Q4FY22 consolidated revenue growth of 23.3 per cent YoY, majorly led by growth in segments plastic (+22.3 per cent YoY) and Adhesive (+27 per cent YoY). In the plastic segment, the company reported Q4FY22 and FY22 volume growth of 11 per cent YoY and 9.5 per cent respectively. The volume growth stood above the industry growth while other peers reported flat to negative growth, indicating that Astral gained market share in FY22.
The brokerage house gave the multibagger stock a ‘BUY’ tag at a target price of Rs 1,900.
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