Updated: Jul 19
Despite Astral Pipes' poor performance over the past year, long-term investors have received a great return on their investment, despite the stock's significant losses. Astral's share price on the NSE has increased by more than 6,000% in the last 10 years, from Rs 25.75 to Rs 1,632.60 per share.
Each Astral share is now worth Rs 1,612 as opposed to Rs 1,632.60 as of one month ago. In other words, over that time, the stock market has declined by 5% for Astral. Astral's share price has dropped by over 30% year to date, from levels of Rs 2,332 to Rs 1,632 levels. This stock's price dropped from Rs 2,265 to Rs 1,632 over the past six months, a decline of almost 28%. Astral's share price, on the other hand, has decreased by almost 16% over the past year, from levels around Rs. 1,950 to Rs. 1,632.
The company is currently the subject of attention due to its subscription to Optionally Convertible Debentures worth Rs 194 crore that Gem Paints allocated, as well as its appointment of the majority of the board members for Gem Paints and Esha Paints. As a result, the company has turned Gem Paints and Esha Paints into subsidiaries and step-down subsidiaries, respectively.
Astral's share price has increased from about Rs 415 to Rs 1,632 during the past five years, representing a rise of about 290 percent or a CAGR of over 31.50 percent for the company's devoted investors who stuck with the stock throughout this time. Similar to that, during the past ten years, this multi-bagger stock has increased in value on the NSE from about Rs 25.75 to Rs 1,632.60 per share. recording around 6,000 percent increase throughout this time, or providing owners who held Astral shares for the whole ten-year period with a yearly return of 51.43 percent CAGR. Therefore, if an investor had put Rs. 1 lakh into this multi-bagger stock ten years ago and had stayed invested in it for the duration of that time, Rs. 1 lakh would now be worth more than Rs. 63 lakh.
Why Are Analysts Bullish?
Analysts are optimistic about Astral's prospects despite a decline in profitability in the fourth quarter for several reasons. First, a pick-up in construction activity and a focus on infrastructure by the government are predicted to cause a spike in the demand for pipes. Second, an improved product mix is predicted to help the EBITDA increase in 2023–2024. Third, the business has also purchased a 51% ownership in Gem Paints, a major player in South India. By scaling up its paint business, Astral will be able to expand internationally. Fourth, the business has made efforts. In the last five years, CAPEX of Rs. 1,000 crores has primarily been used to increase production capacity. In comparison to the 12-month forward PE ratios of the BSE Industrials Index and the BSE Sensex, which are 22.8 and 19.9 times, respectively, its stock is trading at a premium valuation.
Should you Invest?
In its June top stock picks, Axis Securities placed Astral Ltd. in the "Buy" category. "Astral has reported volume growth of 10% in the piping area, which is the greatest among peers in the last 4 years, demonstrating that Astral is gaining market share," the report stated. Despite increasing realizations, Astral is maintaining EBITDA margins of 17.8% while commodity inflation reduces industry profitability. The research also stated that Astral's entry into Valves, Resins, Sanitary goods, and Tanks will contribute to revenue growth in the ensuing years.
Speaking of financials, Astral announced consolidated revenue growth of 23.3% YoY in Q4FY22, primarily driven by growth in the sectors plastic and adhesive (+22.3 YoY and +27.0% YoY, respectively). The business recorded a volume increase in the plastic category for Q4FY22 and FY22 of 11% YoY and 9.5%, respectively. While other competitors reported flat to negative growth, the volume growth exceeded the industry growth, indicating that Astral increased market share in FY22.
The brokerage firm set a target price of Rs 1,900 and assigned the multi-bagger stock the designation "BUY."