A 45% growth in FY13 EPS (9 month growth is 48%) and a 40% growth (might look like an aggressive projection, but I think itsachievable) in FY14 makes it available at 10 times.
TTM EPS is not justified as the weight for a big March quarter is not considered. As management mentioned 60% sales comes from 2nd HY.
Looks attractive to me. Especially if you can take a Macro call that crude prices will help RM prices to be low and INR will appreciate going forward.
I finally see Donald’s vision of Astral’s opportunity For all the talk of competition I think this guy is running faster with a good amount of lead already in his kitty.
Ashirvad Pipes Pvt. Ltd. Bangalore - A Joint Venture Company with Aliaxis S.A. -the largest in Plumbing material manufacturing in Europe.
Market leaders in manufacturing UPVC Column pipes, CPVC pipes & fittings & SWR Pipes & fittings. The company is a licensee of Lubrizol Inc. - USA. With a projected Turnover of 1000 Corers in the current financial year and a goal to double within the next 5 years.
They are projecting to double th turnover in next 5 years.
@Saurabh - If the past growth rates are to be considered, doubling in 5 years is not great here I think as per discussions, Astral is targeting to double turnover in next 3 years.
When I think of Cera and Astral, I just feel that these were sort of no-brainers if one is to consider the on-going real estate boom in India. Across India so many projects are underway that its natural for these cos to grow and do well. We should give more importance to the underlying growth drivers in future.
On concerns, I’m noticing even very small cos like Kisan Moulding, throws ads for CPVC pipes. We should do a re-check on the sustainability of the moat here from time to time.
My only concern was that if Ashirwad is saying that it would double turnover in 2 years ( maybe they are being conservative), what is Astral doing differently so that it doubles turnover in 3 years.
Macro trends and companies past track record demonstrate that they are capable of achieving this, but as u said maybe here we need to check on moat and competition from time to time
Not sure about Ashirvad, but Supreme is growing its CPVC business 40-50% consistently. So, no reason why Astral should not be able to do so in the next 2-3 years. However, I don’t believe, there is any kind of moat in this business at all. Raw material availability is at most a constraint, but I don’t see any of these companies really struggling to get raw material. The only moat possible here is low cost of production and dealer network, where players like Supreme, Astral and Ashirvaad would do well.
With Blazemaster and other smaller niche products Astral is not a one-trick pony any longer.
One big thing in favor of Astral is thecontinuousproduct range expansion they keep doing. Ashirwad has hardly 2-4 products while Astral has a much bigger range.
In the latest (March 2013 result) concall of Finolex Industries, the mgmt did not have a very great view about CPVC, from the growth perspective. Came as a surprise to me.
Just wondering (and I am saying this with no idea of the Chabbrias and his Ferrari analogy) - Finolex doesn’t have a stake in CPVC. In fact, the mgmt was saying 1-2 years away, and that too they’ll invest about 10 crore (and maybe). And for all you know, CPVC is probably grabbing PVC market share and it is in their best interest to say, CPVC is like Ferrari in a forest etc.
I am not saying this just because of Astral. If you go through Supreme’s concalls, they are quite bullish on CPVC and have been for quite some time.
I was thinking - maybe the CPVC non-bullishness was due to them missing the bus.
Another factor - Finolex mgmt said…70% in agri, 30% in housing. CPVC currently is primarily being used in housing plumbing. Supreme’s and Astral’s facts point to it. So, maybe they don’t have a big stake and not a major line of business is what led them to say what they said.
Disc: Of course, speaking with a bias since am invested in Astral.
I agree with Kiran on this. Finolex is more of an agri pipes player which will be dominated by PVC companies.
The CPVC growth shown by Astral, Ashirwad and Supreme confirms that the opportunity is big. We have also confirmed the same from dealers, distributors and builders. Apparently in US 50% market share is for CPVC whereas in India it is still at 5% or so.
The other question is will Finolex or even the more affected GI pipes manufacturers be able to enter CPVC in a major way. I think they will find it very very tough unless Kaneka or other CPVC compound/resin manufacturers are able to increase capacity substantially. And that looks atleast 5 years away.
Yup…it came as quite a surprise to me too. But since the oldest player in the industry is saying this and since this is a rare negative view on the industry, i thought it should be mentioned.
As per Finolex, if they want to enter CPVC in a big way, raw mat sourcing wont be a problem for them and they have got firm commitments from suppliers regarding the same. Their overall brand and distribution is much bigger then Astral or anyone else. Still, they are no gung-ho on the industry. Is it so coz they have missed the bus, hence they dont want to get into it now or coz they genuinely believe that the growth wont sustain…i guess time will tell…
But why? At Rs.400/-, it’s hardly a candidate for stock split (I would have been happier with bonus shares though (similar price action ex-date, but better for tax purposes)
I can understand Asian Paints going in for a split (1:10) at a price of Rs.4K, but Astral baffles me. This move reminds me of Suprajit’s stock split
Here’s the announcement today -
Astral Poly Technik Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 20, 2013, inter alia, to consider the following:
1). To consider and approve the Audited Standalone and Consolidated Financial Results for the Financial Year ended on March 31, 2013.
2). To consider recommendation of Final Dividend for the Financial Year 2012-2013.
3). To consider Sub-division (Stock Split) of the face value of the Equity Shares of the Company.
Equity master has come out with a recommendation for astral in it’s small cap portfolio for a target of 710. A portion of the report…
“Our interactions with the management only further fortified our belief that we had indeed come across the market leader of a fast growing market. The CPVC pipe market is still in a nascent stage in India and growing at a very brisk pace. The quality and cost advantages it has over traditional galvanised iron pipes gives strong future growth visibility.Astral has displayed a very clear focus on brand building and marketing. The company has built a strong distribution network with about 350 distributors and nearly 10,000 dealers across the country. We believe these factors will go a long way in strengthening the company’s long term fundamentals.The company’s financial performance is also a solid proof of its underlying strengths. Astral has not just grown at a phenomenal pace, it has done so while consistently maintaining its margins and return on capital. Over the last five years, the company has grown its consolidated revenues at a compounded average growth rate (CAGR) of 43%. Its operating profits have also grown at the same pace which shows that the company is able to maintain its margins. The net profits have grown at a lower rate of 34% on account of the adverse impact of rupee depreciation.Astral has rapidly added capacity to fuel its growth. However, the company’s average debt to equity ratio of 0.7 times over the last 5 years is within our comfort range. On the return front, the company has delivered an average return on capital employed (ROCE) of 31% and average return on net worth (RONW) of 21% over the same period.So here we have a great business with a leading market position. Add to that, strong brands, robust growth drivers and a well-focussed management. From our years of experience, we have come to believe that it is better to buy a great business at a fair price than an average business at a discount. Astral certainly belongs to the former category”.
Since Nov. 2012 till May 2013 the stock has been trading in a range of 330 to 410. After a long time the stock has given a break out and touched a new high of 430 today. It broke out of a triple top at 410 where it was having resistance and then made another double top at 420. Now we can expect another new high if the markets and the results support the stocks journey.
The stock is in strong hands as it is trading above its 50 EMA of 387 and 200 EMA of 345.
Here is the chart for those who want to see the movement.
There is still not much discussion on Blazemaster CPVC fire sprinkler another cost effective n long lasting substitute then heavy, corrosive ,expensive GI pipe conventional fir fighting system. Blazemastermis the world standard n Astral is having the monopoly after 5 years of struggle it singlehandely fought in India on behalf of Lubrizol . With better pricing power n huge opportunity size it will keep Astral in a better position to deal with vagaries of real estate market.orders have already started trickling in with an altogether new division formed in Astral to tackle the opportunity.
LUBRIZOL INCREASING CAPACITY TO MEET INCREASING DEMAND OF CPVC
SAD INDIAN GOVT DIDNT ALLOW THE CPVC PLANT TO COME UP IN INDIA IN GUJARAT
*Aligns with increasing global CPVC growth and demand
*Ensures global customer access to quality CPVC products
*Plant operational by end of 2014
CLEVELAND, February 20, 2013 - The Lubrizol Corporation announces today its plans to increase its
chlorinated polyvinyl chloride (CPVC) resin capacity through a joint investment in a manufacturing
facility with Sekisui Chemical Company, Ltd. The new facility, which is part of the company's
Phase I capacity expansion, will be located in Thailand and will enable Lubrizol to meet its
global customer demands, particularly in Asia Pacific. Initial resin capacity during this first
phase will be 30,000 metric tons with a total investment of approximately $50 million over a
two-year period and with full operation planned by the end of 2014, subject to regulatory
approvals.
Phase I will be designed to allow for a future expansion as part of Phase II that will double the
size of the plant to 60,000 metric tons with an additional investment of $50 million. The Phase II
expansion is expected be operational by the end of 2016.
Lubrizol recognizes the global growth potential for CPVC products and is committed to ensuring
product availability. CPVC resin manufactured at this site will be designed to meet Lubrizol's and
Sekisui's required performance specifications and quality standards. Both companies will continue
to independently market and sell CPVC resins and manufacture their own CPVC compounds for their
respective customers.
"This is a significant step in expanding our CPVC business and we are pleased to be partnering
with Sekisui on this effort," notes Eric Schnur, president of Lubrizol Advanced Materials. "We are
committed to providing our customers with high quality CPVC products to support the global
building and construction market. And with the construction of this new manufacturing facility,
we are better positioned to support their future business growth."
Lubrizol is recognized as a global leader in reliability, quality and providing innovative
solutions for its customers' high-performance application needs and remains committed to ongoing
investment in its CPVC capabilities that support future growth. Lubrizol's advanced CPVC
technology, sold under the FlowGuard(R), BlazeMaster(R), Corzan(R) and TempRite(R) brands,
delivers exceptional performance for the plumbing, fire sprinkler, industrial and other building
and construction related applications.
About The Lubrizol Corporation
The Lubrizol Corporation, a Berkshire Hathaway company, is an innovative specialty chemical
company that produces and supplies technologies to customers in the global transportation,
industrial and consumer markets. These technologies include lubricant additives for engine oils,
other transportation-related fluids and industrial lubricants, as well as fuel additives for
gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care
products and pharmaceuticals; specialty materials, including plastics technology and performance
coatings in the form of specialty resins and additives. Lubrizol's industry-leading technologies
in additives, ingredients and compounds enhance the quality, performance and value of customers'
products, while reducing their environmental impact.
With headquarters in Wickliffe, Ohio, The Lubrizol Corporation owns and operates manufacturing
facilities in 17 countries, as well as sales and technical offices around the world. Founded in
1928, Lubrizol has approximately 7,000 employees worldwide. Revenues for 2011 were $6.1 billion.
For more information, visit www.lubrizol.com http://www.lubrizol.com/ .
There is some interesting scuttlebutt on sales achieved in first 2 months approximately 250 Cr. this is from a dealer of the co . As such the performance this year cud be much better due to Increased capacity n distribution network, exports of bendable composites which cud be 1000 cr market, launch of several new products like Blazemaster ??? How much cud be the top line & EPS for the year march 14 n 15?
Still there are several districts in India which are completely unrepresented by Astral distributors .Rural India n several govt deptt are not users of CPVC . Mkt size is huge.
I dont know how a single dealer can arrive at figures for the whole company. A lot of grief has come about by extrapolating numbers. This is not the way investing works. Investing is about taking educated calculated gambles rather than extrapolating numbers.
Remember canfin figures? There was a lot of feedback about company likely to report eps of 35 – reportedly from someone higher up in the company---- all that was just eyewash.
Best one can guess from this scuttlebutt and similar things is have an idea about general direction of sales-- how it stacks up against previous year-- and so on.
Astral as an investment story is a great one. What price u pay for it is one’s own decision to make.
But cant we do a scuttlebutt all across the country, with such a large Valuepickr base.Everyone picking up inputs from his city and collating the data here.
Agree that let the company do the talking is the best strategy. However scuttlebutt is quite useful at times IMHO
In Astral case scuttlebutt regarding Blazemaster n BIS approval did help me to load around 350 Rs giving a handsome return till now.
Here again scuttlebutt is not confined to a single dealer but he may be the one who becomes frank enough to come out with nos. I was referring to one of the distributor n not dealer in Delhi but almost all distributors contacted gave very positive response on future prospects. Moreover their competitors Ahirwad dealers were also positive abt Astral n CPVc mkt in general.
Regarding Canfin the nos were good on the indicated lines but the guy seemed to be over optimistic . Still it’s perplexing why the co is not performing .
Scuttlebutt is real useful n let all valuepickr members do contribute in it . This activity needs to be encouraged a lot.
For all the talk of competition I think this guy is running faster with a good amount of lead already in his kitty.