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Astral Q4FY14 results update

May 8, 2014, Thursday, 12:28 GMT | 07:28 EST | 16:58 IST | 19:28 SGT
Contributed by Nirmal Bang


Astral reported Q4FY14 numbers were in line with our expectations. Net sales for the quarter grew 29% YoY to Rs.337 crore on the back of higher volumes. EBIDTA margins grew by 88 bps QoQ to 15.2% due to price hikes. Adjusted PAT came in at 9% higher QoQ at Rs.29.3 crore. Company has continuously expanded its capacity and brought in a lot of newer products in the market. The stock has moved up sharply and can get consolidated in near term; however long term outlook continues to be positive.

At CMP, the stock is trading at a P/E of 23 x and 18 x its FY15E and FY16E expected earnings respectively. We recommend investors to Hold and Buy the stock on declines with a long term perspective.


Financial Performance FY14

- Revenues grew over 31% YoY to Rs.1080 crore on the back of increased capacities.

- EBIDTA margins grew by 84 bps YoY due to pricing power.

- Company has incurred forex loss of Rs. 26.9 crore in FY14.

- Adj PAT is up 44% YoY at Rs.99.4 crore.

- In FY14, company has grown by 34% in Kenyan market and the company has now doubled capacity in that market.

- Astral has received approval for its fire sprinkler product – Blaze Master. This product is expected to have a pan India launch soon and is a better margin product. Astral is expected to have a first mover advantage for this product. This product can add Rs.300 crore revenue in 3 years and can become revenue driver for Astral.

- Astral’s Bore Well Column segment is expected to gain further traction in FY15. Adhesives segment is doing well and is a better margin product as compared to other plumbing products.

- Hosur plant is operational and will enable the company to reduce transport cost for the Southern Market.


Guidance:

- Company expects growth in profits to be higher than that of sales going forward driven by currency benefit and lower freight cost from Hosur plant.

- Lubrizol’s CPVC compound plant coming up at Dholka would be positive for the company’s margins in the future.

- The market for the new products which Astral has launched is as big as Rs.10000 crore and the company is upbeat on the same.

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