This stock turned Rs 10,000 into Rs 8 lakh in 10 years

Spotting the right stock in the early years is the key to accumulate wealth in the stock market. Astral Ltd, the market leader in the chlorinated polyvinyl chloride (CPVC) pipes category, which is now on the verge to become a largecap from smallcap, is one such example.

The company has managed to attract investors due to its consistent growth in profit and revenue. As a result, shares of Astral have soared 8,430% in the last 10 year, mirroring the 8-13 times growth in the company’s bottom line as well as topline during the period.

Shares of the company climbed to Rs 1,813.90 on May 19, 2021 from Rs 21.26 on the same date in 2011. The rise in share price shows that an investment of Rs 10,000 in the company would have now turned Rs 8.53 lakh. With a market value of Rs 36,442 crore, Astral is now placed at 114th place in terms of market capitalisation. The figure was around Rs 398 crore in May 2011.

The company has been again buzzing on Dalal Street due to its better-than-expected financial results in the March quarter. As a result, analysts also retained their bullish call on the company.

Latest results
Astral Ltd posted 241.68% growth in consolidated net profit at Rs 174.60 crore for the quarter ended March 31. It had reported a profit of Rs 51.10 crore in the same period last year. On the other hand, revenue from operations grew 79.32% YoY to Rs 1,127.80 crore.

Edelweiss Wealth Research said, “While the numbers reported in the quarter were above estimates with the significant improvement in realisation coupled with healthy volume growth.”

Astral also indicated healthy pipe and adhesive value growth in April-2021, however, lockdown in a different part of India has impacted its business. “We remain positive on the future prospects of the company led by leadership in CPVC piping and fitting, steep targets for market share in adhesives business and foray into the newer related category of the water storage tank,” Edelweiss said.

Management and brokers view

Hiranand Savlani, CFO, Astral Ltd told Money9.com that the company is aiming to double topline in the next 5 years. “We are bullish on the outlook considering the opportunity for the company. One month lockdown or Covid impact should not be considered for a growing company,” he said.

Market watcher Rajesh Agarwal, Head of Research, AUM Capital is also positive on the company with a target price of Rs 2,200. “Astral is a cash-rich as well as debt-free company. We believe the company’s focus on its brand and the government’s thrust on improving infrastructure and real estate to boost the sector. Demand for products will increase once unlock starts,” he added.