Largecap Stock To Buy: Reports 23% Gain In Revenue, Buy With Rs. 2500 Target Price: Axis Securities

Axis Securities, a top brokerage firm suggests buying the stock of Astral Ltd. The company has reported consolidated revenue growth of 23.3% YoY in Q4 FY22.

Stock To Buy: Target Price

The Current Market Price (CMP) of Astral Ltd. is around Rs. 2232. Axis Securities has estimated a Target Price for the stock at Rs. 2500. This stock has the potential to give a 12% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 43,313 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 2232
Target Price	Rs. 2500
Potential 1 year return	12.00%
52 week high share price	Rs. 2,654.80
52 week low share price	Rs. 1,581.55

Capital Expenditure Growth

Astral has invested Rs. 1,000 Cr in Capex segments like tanks, drain-pro, ball-valve, sanitary ware and faucets, and paint business in the last 5 years. The utilization of the same will be in the coming few years. Therefore, the company is confident that it will be able to grow not only in its existing product portfolio but also, projects additional revenue of Rs. 1,500 Cr in the next 4 -5 years from the following new products and categories

Stock Upside - outlook

Giving a buy rating, Axis Securities said, "Astral reported Q4 FY22 consolidated revenue growth of 23.3% YoY, majorly led by growth in segments plastic (+22.3% YoY) and Adhesive (+27% YoY). In the plastic segment, the company reported Q4FY22 and FY22 volume growth of 11% YoY and 9.5% respectively. The volume growth stood above the industry growth while other peers reported flat to negative growth, indicating that Astral gained market share in FY22."

Volume Growth

Astral Pipes was established in 1996 to manufacture plumbing and drainage systems in India. The company has reported a volume growth of 10% in the piping segment which is the highest among peers in the last 4 years, reflecting that it is gaining market share. Astral is maintaining EBITDA margins of 17.8% despite taking a hike in realizations as commodity inflation is denting the profitability of the industry.

New Acquirement

In April, 2022, the company entered into a definitive agreement to acquire a controlling 51% stake in the operating business of Gem Paints Private Limited. 'Gem' paints has been manufacturing high-performance industrial and decorative coatings in South India.

Disclaimer

The above stock was picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.