Multibagger stock turns ₹1 lakh to ₹3.59 Cr in 15 years: Should you buy?

Astral Ltd Share Price History

On Friday, Astral Ltd. shares closed at Rs. 2000 per share, up 1.07% from the previous close of Rs. 1978.85. A multibagger return and an all-time high of 35,806.64% have been recorded by the stock price, which climbed from ₹5.57 per share on March 23, 2007, to the current price level. As a result, if an investor had made a ₹1 lakh investment in Astral Ltd. shares 15 years ago, it would currently be worth around ₹3.59 crore. The stock price has grown over the past five years from ₹396.18 on August 18, 2017, to the current price level, representing a multibagger return of 404.82%. 

In the last 3 years, the stock has delivered a multibagger return of 170.46% but in the last 1 year, the stock has fallen 1.99%. On a YTD basis, the stock has fallen 14.24% so far in 2022. On the NSE the stock had touched a 52-week-high of ₹2,524.95 on 17-January-2022 and a 52-week-low of ₹1,581.55 on 20-June-2022 which indicates that at the current price level of ₹2,000.00 the stock is trading 20.79% below the 52-week-high and 26.45% above the 52-week-low.

Astral Ltd Q1FY23 Results

For the quarter ended June 30, 2022, Astral recorded a total net profit of ₹96 crore, up 28% from ₹75 crore in the same quarter of the previous year. Consolidated revenue from operations for the quarter was ₹1,213 crore, up 73% from ₹701 crore in the same period last year. In the quarter ended 30 June 2022, total expenses increased 81.15% year over year to ₹1,098.9 crore from ₹606.60 Cr in Q1FY22. Revenue from the plumbing category jumped by 73.6% to ₹876.1 crore from ₹504.70 crore in the same quarter last year, and revenue from the paints and adhesives segment surged by 71.74% to ₹336.8 crore from ₹196.10 crore in Q1FY22.

Should You Buy The Shares of Astral Ltd?

Commenting on the performance of Astral, the research analysts of the broking company Sharekhan have said that “Astral Limited (Astral) reported better than expected consolidated revenues at Rs. 1213 crore, up 73% y-o-y led by strong rise in volumes (up 48.5% y-o-y) and realisations (up 17.1% y-o-y) of the pipes business (revenues up 74% y-o-y at Rs. 900 crore) while adhesive & paints revenues were up 74% y-o-y at Rs. 334 crore. OPM at 14.3% (-419bps y-o-y) disappointed led by inventory losses (~Rs. 25 crore led by declining PVC prices) and employee & launch costs for faucets & sanitaryware (Rs. 5 crores). Consequently, consolidated operating profit at Rs. 173 crore (up 34% y-o-y) lagged our estimate. Further, it booked additional amortization (Rs. 7 crores) related to its paints acquisition and forex loss (Rs. 11.7 cror) related to CPVC imports, which led to lower than expected consolidated net profit at Rs. 89 crore (up 20% y-o-y). A decline in PVC prices continued post Q1FY2023 till date and is likely to further tread downwards in the near term and is expected to lead to inventory loss in Q2FY2023. However, stabilisation of PVC prices in H2FY2023 would provide fillip to pipe demand. Its acquisition of faucet manufacturing plant at an investment of Rs. 28-30 crores has a revenue potential of Rs. 150 crore per annum and would contribute towards 80% in-house production.”

“Astral is expected to feel operating margin pressure in pipes vertical in the near term due to a sustained decline in PVC prices. However, with expected stabilization of PVC prices in H2FY2023, it should benefit from revival in demand led by channel re-stocking. Further, in-house manufacturing of faucets & sanitaryware is likely to provide better operating margins for the vertical. The scale-up of new businesses viz. plastic tanks, valves, paints, faucets and sanitaryware are likely to provide sustainable growth trajectory for the company going ahead. The stock is currently trading at a P/E of 61.5x its FY2024E earnings, which we believe provides further room for an upside owing to strong growth potential for its existing and new businesses. Hence, we retain a Buy with a revised price target of Rs. 2,300,” said the research analysts of the broking company Sharekhan.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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