Naveen - Nice to see you on ValuePickr.
Please wait for the ValuePickr Scorecard Update, expected shortly.
Hi Donald,
Yes, 28 trailing PE is a bit too much. But it will reduce to 24 PE in 3 months (assuming 40crs PAT in q4).
My question to you is-
Won’t it to better to reduce/sell on first sign of business disappointment rather than now when performance is good??
PS- Not arguing but just want to know your thought process & your views on my thought process.
Hi Jatin,
Firstly the Reccos are unanimous - from the Admin poll of Senior ValuePickrs. These are no one single person’s views 
As for me my reasoning for booking profits/exit is pretty simple. I simply follow Mr D’s allocation philosophy to the T. It keeps things very simple and makes SELL decisions easy.
1). This is the first time I am booking major profits in Astral after holding for ~ 3 years, as until now 2. below was being met.
2). For a business to remain (untouched) in my PF a) the business should be able to compound at 25% CAGR (in my reading) and also b) the stock price should be able to compound 25% CAGR for next 2-3 years from these levels (again my reading)
3). For Astral I see a) happening easily but b) clearly not happening.
4). Since I have confidence the business performance will keep chugging along at 25%+rates, this is only 20-25% profit booking this time - shift allocation to new prospects identified.
IF it gets more richer valuations, will do more profit-booking.
IF both are not happening, its time to shift complete allocations to something where I have confidence 2. above will be met.
There have been some new major FII who have entered Astral with more than 1% stake
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MIT- seems investment arm of the world famous university.
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Steady view capital
Any updates on the other investment activities of these firms.
Also Westbridge is still continuing with its 10% stake in dec qtr in Astral which has been a star pick for them . Large amount of funds have been received by Westbridge.
| Astral Poly Technik Limited's new plant at Hosur, Tamilnadu commences Operations | 19 Feb 2014 11:11 | |
| Astral Poly Technik Ltd has informed BSE that the Company has commenced commercial production and sale at its new manufacturing facility at Hosur, Tamilnadu having annual capacity of 7000 M.T. | ||
Hi Vivek,
Just had a look at Page industries’s shareholding pattern,it seems MIT has a 1.7% stake in Page too
Not only MIT but Steadview capital also hold more than 1% stake in Page Besides Astral.
These are renowned well performing FIIs with a good track record.
So seems Astral is on course on becoming another Page industries where focus is on big opportunity size & superb ROCE,Ethical promoter with great execution track record & company enjoys full pricing power.
PE seems to be a case of optical illusion for such companies as venerable Bharat Shah put across.
Hi All,
Any specific reason for Astral’s supermove today ??
Astral Poly Technik (Astral) is the first licensee company of Lubrizol-USA (a company owned by Berkshire Hathway-USA) in India for its** Product Blaze Master** for fire sprinkler system using CPVC Polymer, the company said in a statement. Indian piping market is predominantly controlled by metallic pipes for fibre sprinkler system so far and Astral will be the first mover in the country for CPVC polymer fire sprinkler solution which will be absolutely free from all shortcomings of metallic pipes such as corrosion, scaling and rusting, Astral said in a statement
As the legendary investor Warren Buffett has noted, âIn a finite world, high growth rates must self-destruct. If the base from which the growth is taking place is tiny, this law may not operate for a time. But when the base balloons, the party ends: a high growth rate eventually forges it owns anchor."
Sooner or later the growth will moderate, as the higher base comes into play. Is it already expensive ? An inversion exercise (considering 13% discount rate and 5% terminal growth rate) shows market factoring in 25% CAGR in profits over FY15-FY19 valuing Astral at ~2700 Cr. Expectations are achievable although not conservative by any means.
Hi Rudra,
Can you explain how the calculations work? I would like to learn.
An inversion exercise (considering 13% discount rate and 5% terminal growth rate) shows > market factoring in 25% CAGR in profits over FY15-FY19 valuing Astral at ~2700 Cr.
thanks
HG
Hi Rudra,
I can quote Buffett, where he describes about holding investment forever. (The holding period of an excellent business is forever). Most of his massive multibaggers are the one which he never sold (Coke, washington post, see’s candy, and so on). Besides with this kind of calculations, you would have got out of wealth creator like Page/Nestle from much lower level.
AFAIK, astral is way way far behind the the date of moderate growth. In fact, with no-competition, high margin product like Blazemaster, its growth is expected to accelerate in near future.
Regards,
-Subash
âIn ** this _ time. But when _** ends:
Astral forays into bendable pipes for gas distribution
Astral to invest Rs 30 cr on CPVC fire sprinkler pipes
Warren Buffett-investee Lubrizol to set up $50 mn CPVC compounding plant in Gujarat
From the above link:
“We were acquired by Warren Buffett’s Berkshire Hathaway around 2011 and we had access to capital. Hence we realised that it was the best option to set up the plant on our own. However, our relationship with Astral is going strong and much of the CPVC compound manufactured at the Dahej plant will be used by Astral for manufacturing CPVC pipes and fittings,” Schnur added.
Lubrizol has discontinued tie up with astral, and is starting operations on its own in india.
does it mean drastic change in fundamentals ? though no share price impact as yet…
Ash,
The discontinuation of the JV is for manufacturing of CPVC compound. There will not be any changes in the fundamentals of Astral since Lubrizol will continue to supply CPVC compound to Astral. I think its a good news for Astral since the new plant will reduce its imports and hence the forex fluctuation risk.
Disclosure: Was invested in Astral and recently sold out (still bullish on the long term prospects of the company).
As per latest holding now there are 11 FIIs holding nearly 16% of share holding besides 5 MFs holding approx 1.1% holding.Promoter holding is approx 64%.
LTR Focus fund is the latest FII entrant besides Steadview & MIT holding more than 1% stake in the co.
LTR other holdings are in Page Ind,SCUF,VGuard,& KPIT.
Miten Mehta is the other gentleman holding more than 1% stake in the co.any views on him?
Seems stock is moving in very strong hands imho.
Discl-Invested 10% of my portfolio in Astral.
Westbridge has not sold a single share of its 10% stake in Astral as on 31 March 14 which it has been holding for 3-4 years.
@Vivek Gautam Does this mean that Lubrizol will produce in India but won’t directly supply? Will it only supply to Astral that will take care of the distribution?
Equity
Due to huge demand of CPVC compound in India Lubrizol will make it in Dahej India which will cater mainly to their distributorqs Astral n Ashirwad requirement.
It’s a win win situation Afro both as now Astral will not hv to suffere the vagaries of forex fluctuations IMHO.
@Vivek Gautam Thank you for your reply… Now I understood it… The starting line of Economic Times article was very misleading stating only that Lubrizol has discontinued tie-up with Astral…