Astral Poly Technik has continued its unabated rise after hitting a 52-week low of 815 last October. The stock recently hit an all-time high of 1,380 and this rip-roaring comeback has been used by Vijay Parikh to lighten his holding by 302,005 shares. The sale fetched 385 million and Parikh now holds 1,098,428 shares or 0.91% of the company worth 1.5 billion. Overall promoter holding stands at 58.49%. Though Parikh is not on the board of directors, he was awarded preference shares when Astral Poly completed the acquisition of his firm Resinova Chemie in 2015.
Founded by first-generation entrepreneur Sandeep Engineer, Astral Poly is a successful case study of branding in a commodity business. Net sales have grown from 12.5 billion in FY15 to 25 billion in FY19 with net profit almost tripling to 1.97 billion from 688 million. While Q4FY19 was not upto analyst expectation, the run-up in the stock price seems to be making light of analysts concern over valuation. The fall in the price of crude oil, an important input for plastics pipes might be driving the recent momentum and so must be the widening of its product portfolio. A research report from East India Securities states that the integration of Rex Polyextrusion will allow it to diversify into sewage, drainage and rainwater urban infrastructure and also cable ducting in telecom sector.
Parikh’s selling comes at a time when the stock is trading at a trailing-twelve-month P/E of 112x. But its P/E multiple must have been the last thing on his mind while he was part encashing his holding. Given its past growth, it is a favorite among FPIs and domestic mutual funds who hold 21.93% and 5.73%, respectively as per the March 2019 disclosure. Among FPIs, the biggest is Steadview with 9.16% and among domestic mutual funds, Axis MF and UTI MF hold 2.86% and 2.15%. Compared with the September 2018 holding, overall mutual holding has decreased from 6.42% while FPI holding has increased from 20.78%.
So far, Astral has stayed true to its name and its stratospheric return is the stuff of every newbie investor’s wet dream. Depending on where you calculate it from, it looks impressive all the way. Since October, it is up 65% and in comparison, the Nifty Midcap 50 is up 13%. Over the past five years, it is up 4x and the Nifty Midcap 50 49%. As for decadal or return post-IPO, let’s not even venture there.