ASTRAL POLYTECHNIK
One of the famous quotes of Buffet is âLeaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of returnâ
As can be seen from the capex done over the years by Astral along with the high rates of return, Astral Poly looks like a company worth looking into.
Cmp 125 , market cap 274 crores.
Astral Polytechnik is a focussed player in the space of PVC and CPVC pipes and fittings among other plumbing products with excellent pan India reach and strong management. The company has a wide range of brands like CORZAN (industrial pipe fittings) , FLOWGUARD (pipes and fittings), BLAZEMASTER (fire sprinkler systems), FOAMCORE (underground systems) , ULTRADRAIN (conventional system) , AQUARIUS (outer loop lines), AQUATEK(high impact ABS plumbing system) , ASTRAL UNDERGROUND, DWV (drain,waste and vent), BENDABLE (composite pipe), AQUASAFE etc and has over 60% market share in India.
Over the years the company has kept expanding the capacities in line with increased demand from 4000 MT in 2004 to 30867 MT in FY 10 and currently in Jan 2011 the capacity stands increased to 35000 MT. All this has been done without any stretching of the balance sheet or dilution of equity. The capacity is expected to reach around 60000 MT by FY 12.
CAPACITY AND UTILISATION
YEAR |
06 |
07 |
08 |
09 |
10 |
9m FY 11 |
CAPACITY |
4000 |
9074 |
11800 |
25968 |
30867 |
|
UTILISATION |
2417 |
5090 |
6895 |
11164 |
19411 |
18328 |
Cash used in investing |
7 |
11.52 |
26 |
40 |
18 |
FINANCIAL RESULTS FOR LAST FIVE YEARS
YEAR |
06 |
07 |
08 |
09 |
10 |
9MFY11 |
9MFY10 |
SALES |
56 |
101 |
144 |
205 |
304 |
269 |
187 |
PBIDT |
7.9 |
14 |
24 |
35 |
44 |
26.7 |
22.15 |
NP |
4 |
9 |
17 |
14.6 |
28 |
20.6 |
16.3 |
LOAN |
17.8 |
24 |
32 |
39 |
40 |
||
ROACE* |
24.51 |
18.6 |
22.44 |
26.09 |
25.5 |
*DENOTES PBIT/AVG CAPITAL EMPLOYED
9M SALES AT 269 CRORES AND NET PROFITS AT 20.6 CRORES. EPS FOR 9M FY 11 IS 9.15.
OUTSTANDING SHARES 2.24 CRORES.
HIGHLIGHTS AT END OF Q3 FY 11
Astral Poly
Technik Ltd., leaders in manufacturing ofCPVC pipes & fittingsannounced the financial results
for the Quarter ended on 31st December , 2010.
Overview of Q3 FY 2010 v/s Q3 FY 2009
â Companyâs sales from operations has increased by
45%, to Rs.98.49 Crore for the FY 2010 (Q-3) as against Rs. 67.81 Crore in FY
2009 (Q-3).
â PBT has increased by 32% to Rs. 9.94 Crore for
FY 2010 (Q-3) as against Rs. 7.55 Crore in FY 2009 (Q-3).
â Cash Profit has increased by 32% to Rs. 11.14
Crore for FY 2010 (Q-3) as against Rs. 8.47 Crore in FY 2009 (Q-3).
â Profit After Tax (PAT) has increased by 34% to
Rs. 8.38 Crore for FY 2010 (Q-3) as against Rs. 6.27 Crore in FY 2009 (Q-3).
â The Company has delivered an Earning Per Share
(EPS) of Rs. 3.73 for the current quarter (On Rs.5 Paid up Shares).
As usual, the company has been able to maintain
its growth momentum and delivered a topline growth of 45% during the quarter.
However, the EBITA margin has dropped compared to Q-2 quarter which was mainly
because of reduction of PVC-Resin price during the last quarter. The drop in
PVC price during the last quarter was appx. 7% to 8%. During the quarter other
income has increased substantially mainly because of writing back of provision
of earlier year and income on investments. However, on a consolidated basis the
overall profitability has increased by 34% from Rs. 6.27 Crores to 8.38 Crores.
Since long, the company has been able to maintain its 40% + CAGR growth and
during the current quarter also company has been able to maintain 45% topline
growth. The last Quarter is always bullish in our industry and the company is quite confident that company will do better
(Q-4).
The new products launched by company such as SWR/
FOAMCORE/ MANHOLE etc are getting very good response in the market besides the
existing products.
During the quarter, the company has utilized its
capacity to the tune of 6,856 MT, Further the capacity utilization during the
first nine months of the last year was 13,160 MT against that current year
first nine months is 18,328 MT which shows a growth of 39%. During the last
quarter company has utilized its capacity to the tune of 89% (Total Capacity as
on closing of Q-3 was 30,867 MT). However, the company has already increased
its capacity to the tune of 4,500 MT in the month of January and few machines
are in pipeline which will be installed in the month of February to make the
total capacity Appx. 45,000 MT.
During the quarter rupee was comparatively stable
and moving on an average between Rs. 44.40 to Rs. 45.40 hence the company was
able to gain Rs. 0.36 Crores in foreign exchange. However on Liabilities paid
during the quarter company has incurred a loss of Rs. 0.90 Crores and on unpaid
liabilities company has gained Rs. 1.26 Crores. Hence the net effect is Rs.
0.36 Crores during the quarter.
Kenya joint
venture company will start production from January.
POSITIVES:
THE COMPANY HAS EXCLUSIVE ARRANGEMENT TO SOURCE ITS RAW MATERIALS FROM LUBRIZOL US. LUBRIZOL IS UNLIKELY TO PROVIDE SUCH ARRANGEMENT TO TOO MANY OTHER PLAYERS IN INDIA. THIS PROVIDES A SORT OF ENTRY BARRIER FOR THE COMPANY.
THE COMPANY KEEPS ON LAUNCHING NEW PRODUCTS E.G IN Q1 FY 11 IT LAUNCHED MANHOLES/INSPECTION CHAMBERS AND IS LIKELY TO LAUNCH CPVC BASED FIRE SPRINKLER SYSTEMSâFIRST OF ITS KIND IN INDIA.
CONSISTENT GROWTH OVER THE YEARS SHOWN BY THE COMPANY AIDED BY REGULAR AND TIMELY CAPACITY EXPANSIONS
EXCELLENT BALANCE SHEET INSPITE OF REGULAR CAPACITY EXPANSIONS.
EXPORTS TO NEIGHBOURING COUNTRIES LIKE SRILANKA, BANGLADESH, AND NEPAL COULD BE GROWTH DRIVERS. KENYA PLANT EXPECTED TO BE OPERATIONAL SHORTLY WILL ALSO AID GROWTH.
VERY GOOD RETURN RATIOS WITH ROE IN EXCESS OF 20 OVER THE YEARS
NEGATIVES:
RAW MATERIAL PRICE LINKED TO CRUDE DERIVATIVES AND HENCE PROFITABILITY MIGHT BE AFFECTED DUE TO SHARP SPIKE IN CRUDE PRICES.
SINCE IT SOURCES A MAJOR PART OF ITS RAW MATERIALS FROM OVERSEAS, IT IS EXPOSED TO CURRENCY FLUCTUATIONS.
OVERALL THIS LOOKS LIKE A BUFFETT LIKE COMPANY WHICH USES INCREASING AMOUNTS OF CAPITAL TO EXPAND CAPACITY AND GENERATES HIGHER RETURNS ON THE EQUITY.