Company Reported Robust 49% YoY Hike In Sales, Buy This Largecap Stock With Rs.2283 Target Price:Top Brokerage
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Stock To Buy: Target Price & Financial Result
The Current Market Price (CMP) of Astral is Rs. 1986. IDBI Capital has estimated a Target Price for the stock at Rs. 2283. This stock has the potential to give a 15% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 42,656 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 1986 |
| Target Price | Rs. 2283 |
| Potential 1 year return | 15.00% |
| 52 week high share price | Rs. 2,524.95 |
| 52 week low share price | Rs. 1,581.55 |
Astral reported 74% YoY net sales growth in the plastic segment to Rs. 8.7bn led by a 17% YoY NSR improvement to Rs. 240/Kg. The company has reported a robust 49% YoY increase in sales volume which aided net sales, however, Rs. 250mn polymer inventory loss weighed on margins. Its pipe business volumes increased by 48.5% YoY at 36,578MT. EBITDA improved by 32.7% YoY to Rs. 1.7bn. The company reported a net profit of Rs. 0.8bn, higher by 20.3% over Q1FY22.
Why Should Investors Buy This Stock: IDBI Capital
According to IDBI Capital, “Astral remains our preferred pick given its strong brand recall, extensive distribution network, new capacity addition, foray into allied business verticals like paints and sanitaryware and healthy balance sheet. Astral’s entry into allied business verticals like paints and bathware will further improve revenue traction for the company.”
“Astral’s Q1FY23 result was above our estimates on net sales front, while operating margin and PAT were in-line. The management guided that the margins in Adhesives business was also under pressure due to higher chemical prices which have started falling from June’22 onwards. Our interaction with the management over growth strategy in near term further strengthens our outlook on the company. We have broadly maintained our earnings estimates and maintain Buy with a Target Price of Rs. 2,283, assigning 60x PER on FY24E,” the brokerage firm added.
Company Portfolio: Astral
Astral Pipes was established in 1996 to manufacture plumbing and drainage systems in India. Now, the company is in process of integrating gem paints business with Astral. Gem Paints sales in Q1FY23 were up by 91% YoY to Rs. 553mn. The East expansion work is complete and the company has rolled out products such as water tank, SWR & PVC pipes other product lines would be rolled out post approval. Recently, the company inaugurated its first display center for its bathware range in Ahmedabad. This display center is Astral’s flagship showroom that will mark the brand’s first exclusive showroom in India.
Disclaimer
The above stock was picked from the brokerage report of IDBI Capital. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
