Even HIL (Hyderabad Industries Ltd) is expanding into Piping and Fittings industry soon as per management interview. Link below:
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Astral Polytechnik has recently gotten into acquisiton mode
Astral Poly Technik Annual Report 2018 Notes
- It’s always been our goal to change the market norms rather than to confine by them. This year, our focus will be to launch products for the infrastructure sector as well as the domestic sector. We are introducing advanced products for drainage and hot/cold plumbing systems.
- Apart from this, the launch of our ‘ResiQuick’ instant Adhesive product has taken the brand ‘Astral’ to every nook and corner of India. ResiQuick is a substantially superior product, the first of its kind instant adhesive ampule, available at an attractive price point in the Indian market .
- Astral being a responsible corporate house on growth trajectory, we always try to judiciously allocate the money for growth rather than to be either a debt-free company or sitting on cash to maximise the returns for our shareholders.
- We made the right decision of entering into Adhesive Business 3 years before and now we are entering into Double Wall Corrugated (DWC ) pipes and Infrastructure space through inorganic way and we feel this new category will take the company to a new height in terms of growth and profitability while expanding the offerings for the market.
- NEW PRODUCTS : ‘RECYFIX’ – comprehensive range of surface drainage system; ‘PEX-A PRO’ - Advanced, next generation plumbing system for hot and cold water; ‘INSUPRO’ - XLPE Insulation for hot and cold water piping as well as for HVAC etc.; Launched ‘Double Wall Corrugated‘ pipes for underground drainage system – that can replace bigger diameter RCC pipes; Backward integration in CPVC at all plants. This will help improve in gross margins
- UPCOMING MANUFACTURING FACILITIES: Rajasthan plant has commenced commercial production from June 2018; Additional capacity in hosur plant will be operational and to start commercial production from September 2018; Exploring to establish footprint in East India by setting up a manufacturing facility
- Present build-up capacity of adhesives business can generate business around INR 12,000 MN. Currently offering total 642 SKUs
- During the year under review, your Company has increased its installed capacity by 10% from 1,37,708 MT to 1,52,101 MT. Your Company has utilised its capacity to the tune of 1,05,753 MT. as against last year’s figure of 87,694 MT. which shows a utilization growth of 21%.
- During the year under review, your Company has incurred capital expenditure to the tune of Rs. 408 Lacs towards the purchase of land and Rs. 8,286 Lacs towards plant & machineries, factory building and other capital expenditure.
- Construction activity within the country has started growing slowly and it will pickup pace in the coming years, which will be the real positive factor for the county as many industries are associated with the construction activity. Now problems related to RERA are almost resolved and things have started moving in the right direction. Govt. is spending sizeable amount on the infrastructure activities, which is going to help to grow the economy in the coming years.
- From the year 2012 to 2017, the piping industry in India has grown by 10%-12% CAGR and attained the size of Rs. 250 Billion (Crisil Report). The main reason for the growth in the demand was increased construction and irrigation activities and replacement of metal by plastic.
- As per the CRISIL forecast for 2017-2022, Plastic Pipes & Fitting Industry will post a CAGR of 12-14% reaching market size of ` 460 Billion in India.
- Due to inherent advantages of plastic v/s metal, the usage of plastic pipes is increasing and recently due to lower crude price the shift is getting faster from metal to plastic. Also within the polymer, the usage of CPVC is increasing continuously. As per the CRISIL estimate, CPVC is expected to grow at a CAGR of 24-25% by 2021-22. The overall share of CPVC pipes which was 12% within the Pipe Industry in 2016-17, would go up to 20% by 2022. Also, the demand is coming from replacement of older plastic pipes with the new polymer pipes.
- Year 2017-18 was full of challenges. On one hand, GST regime was implemented and on the other hand there was significant slowdown in the real-estate sector. In spite of these challenges, your company was able to generate a volume growth of 16%, which was the highest in the last 3 years though the Industry growth of piping segment was very low. Company not only focussed on the volume growth but also improved the Gross Margin from 28.78 % to 32.60% and EBIDTA margin also improved from 14.58% to 15.39%. Due to lower price of crude in International markets and appreciation of currency, the price of polymer was low during the year. Hence your company was able to deliver a value growth of 9%. The backward integration of CPVC polymer helped the company to grow the volume and improve the Gross Margin.
- Ghiloth Plant: Your company has successfully completed the construction of the plant and installed the machineries. The total production capacity of the plant is 22,700 M.T. The plant will be operational in the July 2018 once all the regulatory approvals are obtained. The company will be able to save on logistics cost in the North and North-East region and will be able to expand its footprints in the region where the presence of the company is low or nearly absent.
- Your company is consistently adding new distributors to its portfolio. As of today, the company has 750+ distributors and 28,000+ dealers across the country. This year, the focus was on increasing the dealer’s network.
- GST is considered to be positive for organized players like your Company and to create an opportunity for organized players to replace the market share of unorganized players. Share of unorganized sectors in the Indian Plastic Piping industry is estimated at around 40%, which we expect, will gradually move to the organized sector sizeably.
- Adhesive business of the company is growing steadily at the domestic level and delivering good margins. Last year domestic business has grew by 20.3% in value terms and EBDITA margin also improved as compared to the previous year from 16.0% to 19.1%. Though the margins are very robust, it has to be seen how the high margins can be sustained in a rising raw material price scenario.
- The overseas adhesive sales has grown by 6.2% . The EBDITA was 5.7% mainly because of the lower performance of US subsidiary. However, we are forseeing that in the year 2018-19, the growth will be better and there will be improvement in the margins.
Originally posted on Astral Poly Technik Annual Report 2018 Notes You can find other Annual Report Summaries here too.
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@hitesh2710 are you still tracking Astral? Any takes on the current business and Sector views flr next 3-5 years?
I am back from a visit to Ahmedabad and I saw increasing amounts of sign boards of Astral Pipes on shops. I was on a visit 4 months ago too but this time saw a lots of sign boards. Even on state highways I saw some local shops had Astral Pipes sign boards. Anyone tracking this company recently?
Disc : Not holding.
Ahmedabad is the home city for Astral thus there are quiet a few advertisements here on massive billboards and auto-rickshaws. General Preference seen for Astral here due to strong distribution network in Gujarat, but have also seen people using Supreme a bit as well
Starting to track this company.
Extremely high visibility in North India especially in Tier 2-3 cities. A lot of small towns had a lot of dealers selling this and a lot of advertisements too. No presence of ASH or Supreme (names mentioned in the threads above).
Source: Rishikesh, Dehradun and all the cities on the Ganga Canal Hijghway/NH34
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Earnings call highlights
ASTRAL expects the new pipe facility in Odisha to become operational by
Q3FY21. Expansion at the Hosur (Tamil Nadu) plant is complete while that at
Gehlot, Rajasthan, will conclude by end-FY20.
Capex is pegged at Rs 1.8bn in FY20 and ~Rs 1bn in FY21.
The company is keeping a tight lid on working capital days. It has reduced
debtor days from 31 to 26 days and plans to bring this down further to 20
days in FY21.
Debt totals ~Rs 1.4bn currently which ASTRA plans to repay in FY21.
Bollywood actor Ranveer Singh has come onboard as the new brand
ambassador for three years starting FY21. Nonetheless, management expects
A&P spend to remain in the historical range.
Profit growth is guided to remain higher than revenue growth in FY21 as well.
Pipe segment
ASTRAL believes extension of the anti-dumping duty (ADD) on CPVC will be
formalised soon and expects the prevailing rates to continue. ADD imposed
on markets such as China and Korea has benefited the company and
management expects sustained growth momentum in this segment.
Pipe volumes are guided to grow 10-15% in FY21.
Subsidiary Rex has posted lower revenues in 9MFY20 due to the reduced
infrastructure spend and also some working capital corrections. As the
government’s spend on infrastructure gathers pace, management expects Rex
to see better growth momentum ahead.
Adhesives segment
The India adhesives business saw tepid growth in Q3 as ASTRA was transiting
from a three-tier distribution setup to a two-tier framework. This shift has
now been completed and the company expects the business to grow in Q4.
Management has guided for double-digit growth in adhesives in FY21 and
further improvement in margins.
A new adhesives facility is being planned in Dahej (Gujarat) which will take two
years to complete.
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Our Managing Director Mr. Sandeep Engineer will share his views on building material industry in the post-COVID-19 world alongside many distinguished industry experts. It will be an insightful session, do join us for this webinar.
Details of the webinar:
When: May 8, 2020 04:00 PM India
Topic: Post COVID - Challenges and opportunities for the Building Material Industry.
Register in advance for this webinar:
Welcome! You are invited to join a webinar: Post COVID - Challenges and…
- The current impact of COVID-19 on the Building Material sector 2. Impact on the building product demand 3. A clear understanding of the economic effects for the building materials industry 4. Best practices to revive the Building…
After registering, you will receive a confirmation email containing information about joining the webinar.
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I attended this webinar.
Some key points by Mr. Engineer were,
- Expecting to restart plants this month. They have been getting enquires on the products from customers.
- This quarter and the next quarter, focus will be to break even. Can’t think of profitability now.
- Expects the covid related impact to business and challenges to last for 2 years.
- He expects a lot of consolidation to happen across industries. Companies with strong cash flows and low debt will emerge stronger and continue to grow, while those with cash flow issues will merge with others.
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Sorry, I missed to attend the webinar. I request members who attended the webinar to post main points / takeaway from this webinar
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Astral Q4 results:
Press release:
Revenue is down -18% YOY. They were doing well in Jan and Feb, however the impact from March wiped out the gains and the qtr ended up negative. They have given a break up of Jan & Feb vs March sales for both pipes and adhesives
One concern is the flat numbers for adhesives even in Jan& Feb. It has been flat for the last 3 qtrs and management was confident of adhesives picking up in Q4. However it doesn’t seem to have worked out well.
Conf call scheduled for tomorrow.
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PAT for the entire year still handsomely up by 26.7% from 197 Cr to 250 Cr
A few noteworthy points from the presentation:
Coming soon :Plant in East India New Piping plant coming up to cater to NE Market.
The company has purchased approx.100,000 sq. yard land to establish a manufacturing facility in Bhubaneswar,Odisha (East India). Construction will start in current year,plant will be ready by March 2021.
Resi-Shield Foot press Sanitizer dispenser:
Very cost effective tool for hand hygiene.
Made from PVC pipes and fittings.
Easy to install and carry.
Inventory days slightly higher due to the lockdown.
Revenue share:
Piping:77% and Adhesives:23%
Net Debt at 55.5 Cr.
Debt/Equity now stands at 0.09.
Consistent improvement in Gross Margin over the years and will continue to improve further consistently in coming years.
Piping gross margin now at 36.5%.
Adhesives gross margin at 40.9%.
Consolidated margin at 38.1%
Sales down in month of March by 57.7% for pipes & 59.8% for adhesives.
Unorganized players still have 40% share and company confident that it will chip away at that and grow its market share over a period of time.
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Astral is coming up with its own hand sanitizer and sanitizer dispenser. I’m impressed with their strategy. Management is very proactive and wants to utilize this opportunity. Sanitizer dispenser is also innovative, will be a quite useful B2B product.
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Worth watching, Business updates
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Hi @hitesh2710 and everyone,
Could you please share the link (dating back more than a decade) where it was first mentioned that Lubrizol is entering agreement with Astral Polytechnik.
Or was it mentioned in Astral’s Annual Report? Which year?
Thanks
Respected Moderators : Please do not delete this post. I just want to learn
Why is the company doing so much Investor Meet, so frequently. Isn’t is good that Mgmt should devote their time to their business more?
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Most of the quality companies aspire to keep stock price less volatile by having learned, professional, progressive and stable institutional shareholders on board which also give seamless path to managements in executing expansion plans. This is also the reason behind several high-quality MNCs refraining from diluting equity to public beyond a point. Additionally, check-ins by institutional investors also fuels confidence among market participants about company’s fundamentals and future plans.
In contrast, business optimism can also be determined by managements endeavor to increase personal shareholding through buybacks or active market purchases.
Caveat: Despite multiple meets if managements fail to convince institutional investors, it means there are few lacunae in the business model that needs to weed out.
Chiefly, it is always better to keep an eye on changes in institutional shareholding in the ensuing months.
Please correlate accordingly.