Astral Poly Technik March Quarter Results Analysis

DSIJ Intelligence / 28 May 2012

Astral Poly Technik (ATPL), a leading manufacturer of chlorinated polyvinyl chloride (CPVC), has reported a robust 48 per cent rise in net profits to Rs 19.28 crore during the March quarter ended 2012.


Astral Poly Technik (ATPL), a leading manufacturer of chlorinated polyvinyl chloride (CPVC), has reported a robust 48 per cent rise in net profits to Rs 19.28 crore during the March quarter ended 2012 as against Rs 13.02 crore in the corresponding quarter of the previous year. The topline of the company grew by a decent 29 per cent (YoY) to Rs 183.54 crore driven by better volume growth coupled with higher price realisations. While volume growth stood at 17 per cent to 11,698 tonnes, the management also took a decision during the March quarter to increase its product prices by 7 per cent in order to pass through the effects of a rise in raw material prices and rupee depreciation.

This led to an abnormal performance at the operating profit level as the EBIDTA for the March quarter grew exceptionally by 104 per cent to Rs 38.77 crore as against Rs 18.93 crore in the corresponding quarter of the previous year. The EBIDTA margins also expanded by 779 basis points to 21 per cent on account of the lag effect of benefits from the strategic price hikes. Going forward, the management has guided that the EBIDTA margins would ease down to settle at around 13-14 per cent on an annual basis, which, according to them, seems more realistic.

On the net profit level, the company had to book forex losses amounting to Rs 8.21 crore on account of liabilities in foreign exchange, despite which ATPL managed to post a mammoth bottomline performance. In fact if we adjust for the exceptional forex losses, the net profits would have registered a whopping 112 per cent growth on a YoY basis.

During the quarter, ATPL has increased its total installed capacity from 48,432 TPA to 65,496 TPA with the successful commissioning of its new facility at Dholka in Gujarat. With this current capacity the management estimates that it can achieve a sales turnover of Rs 1,000 crore. Going forward, the management sees no slowdown in the demand scenario as of now and has guided for 25 to 30 per cent topline growth in FY13. 

We at DSIJ remain positive on the business prospects of ATPL owing to the strong demand for plumbing systems from the replacement as well as the new markets, coupled with ATPL’s leadership position and its thriving emphasis to increase its product offerings and keep in pace with the needs of its customers. The higher entry barrier in CPVC pipes business would continue to give pricing power to ATPL despite costlier imports of raw material.

Based on the management’s guidance and our estimates, we expect the FY13 EPS to stand at around Rs 25.38 per share. Consequently, the PE multiple at current market price of Rs 200 works out to 7.88x. With favourable return ratios in excess of 20 per cent and significantly low debt-to-equity ratio of 0.37x, investors may look to park a portion of their funds in this counter at the current levels with a price target of Rs 240 per share.

Financial Performance (Standalone) (Rs Crore) (Quarterly)

Particulars

Mar-12

Dec-11

Mar-11

YoY

QoQ

Sales

183.54

160.98

141.91

29.34

14.02

Other Income

0.27

0.75

-0.45

-161.02

-63.79

EBIDTA

38.77

17.16

18.93

104.82

126.02

Depreciation

3.70

3.42

2.85

29.77

8.20

Interest

2.32

2.00

1.07

117.64

16.17

Tax

5.26

1.19

3.31

59.10

343.64

Exceptional Items

8.21

5.80

-1.32

-723.65

41.55

PAT

19.28

4.75

13.02

48.07

305.93

Equity Capital

2.25

2.25

2.25

EPS (Rs)

8.58

2.11

5.80

48.07

305.93

EBIDTA Margin

21.13

10.66

13.34

7.79

10.47

PAT Margin

10.50

2.95

9.18

1.33

7.55

Financial Performance (Cons) (Rs Crore) (Yearly)

Particulars

Mar-12

Mar-11

Growth (YoY)

Sales

584.56

411.90

41.92

Other Income

1.98

0.65

206.59

EBIDTA

84.57

55.95

51.17

Depreciation

13.79

10.76

28.20

Interest

7.33

4.69

56.43

Tax

10.51

8.55

22.90

Exceptional Items

15.43

-0.24

-6405.56

PAT

39.50

32.84

20.25

Equity Capital

2.25

2.25

EPS (Rs)

17.58

14.62

20.25

EBIDTA Margin

14.47

13.58

0.89

PAT Margin

6.76

7.97

-1.22

Financial Parameters

Particulars

Mar-12

P/E Ratio (x)

11.26

P/BV Ratio (x)

2.42

ROE (%)

21.46

ROCE (%)

16.66

Market Cap/Sales (x)

0.76

Enterprise Value (EV)

477.48

EV/EBIDTA (x)

5.65

Debt/Equity Ratio (x)

0.37

Note: For a detailed analysis on the company, we suggest readers to refer to our DSIJ Magazine Vol 26, Issue No 25 dated November 21 – December 4, 2011.


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