Rs 588 to Rs 2,035: This debt-free stock turned into a multibagger in three years, trading near record high

Shares of Astral Ltd have delivered multibagger returns in the last three years. Astral stock, which closed at Rs 588.04 on August 14, 2020 was trading at Rs 2035 in the current session (August 16, 2023), delivering 246% returns in three years. During a period of two years and one year, the stock climbed 32% and 35%, respectively. In comparison, Sensex has zoomed 72.67% in three years. The stock of the plastic pipe maker hit a yearly low of Rs 1297.90 on March 28, 2023 and a record high of Rs 2057.95 on August 4, 2023.

In the current session, Astral shares reached an intraday high of Rs 2035, rising 2.24% against the previous close of Rs 1990.35 on BSE. A total of 0.55 lakh shares of the firm changed hands, amounting to a turnover of Rs 11.05 crore on BSE.

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Market cap of the firm rose to Rs 54,306 crore. In terms of technicals, the relative strength index (RSI) of Astral stands at 59.9, signaling the stock is neither oversold nor overbought. The stock has a one-year beta of 0.8, indicating low volatility during the period. Astral shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

The firm reported a 34.75 per cent rise in Q1 consolidated net profit at Rs 119.8 crore against a net profit of Rs 88.9 crore during the April-June quarter a year ago. Revenue from operations rose to Rs 1295.2 crore in the June quarter against Rs 1224.3 crore revenue of the corresponding period last fiscal.

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Operating profit or EBITDA, zoomed 17.54 percent to Rs 201.6 crore in Q21 compared to Rs 171.7 crore in the year-ago quarter. EBITDA margins came at 15.71 percent against 14.16 percent year-on-year.

Here’s a look at the outlook of the multibagger stock post Q1 earnings.

Brokerage IDBI Capital expects the stock to hit the target of Rs 2109 post Q1 earnings. The brokerage said Astral Ltd’s (Astral) Q1FY24 result was in-line with its estimates on all key parameters.

“We believe Astral is well positioned to benefit from plumbing growth, foray into paints and bathware, timely capacity addition and focus on improving product mix. Maintain HOLD with a revised TP of Rs2,109 (Earlier Rs1,958), assigning 70x PER on FY25E,” said IDBI Capital.

Nuvama Institutional Equities sees the stock hitting Rs 2100 mark in a year.

“Lower commodity prices and growth in the real estate sector should boost volume and margin. The company’s wide portfolio, extensive distribution, strong brand, net debt-free Balance Sheet, and high return ratios excite us. We maintain 'BUY' with a revised TP of INR2,100 (at 75x FY25E earnings),” said Nuvama.

Centrum Broking has downgraded the stock to reduce rating with a target price of Rs 1717 post Q1 earnings.

"Strong volume growth in pipes segment and steady growth and margin improvement in adhesives business should help Astral grow its sales/EBITDA/PAT at CAGR of 15/19/27% over FY23-25E. We increase our EPS estimates for FY24/25 by 6/4% respectively. Despite the increase, growth is fully priced in as stock had sharp 28% run in last three months. Hence, we downgrade to reduce rating with target price of Rs 1,717, valuing at 60x FY25E EPS," said Centrum Broking.

Astral manufactures plumbing and drainage systems. The company offers plumbing pipes, fittings, insulation tubes, fire sprinklers, water tanks, cable protection, and drainage systems. Astral serves residential and industrial customers in India.