Once a microcap stock, this company is now a market leader in the pipes space, growing its market capitalisation to more than Rs 17,000 crore from around Rs 100 crore in the past decade.

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Ahmedabad-based Astral Poly Technik has rallied nearly 7,200 percent in the past 10 years, rising from around Rs 16 in 2010 to Rs 1,167 now. The uptick in the stock roice has reflected in earnings as well, with its revenue and profit jumping 13-14 times during this period.

To put this run in perspective for investors, take a look at this: an investment of Rs 10,000 in Astral Poly Technik in 2010 would be worth Rs 7.3 lakh today. The pipemaker rose 29 percent in 2019.

The steep hike in its share prices has done little to dent the enthusiasm of analysts who remain bullish on the Astral Poly Technik stock. While there are many near-term positives for the stock, it still has the potential to rise further, they say. Brokerages largely expect the company's profit growth to rise over 30 percent over FY19-21.

According to Jefferies, Astral Poly Technik is ahead of its competitors thanks to a slew of new launches and continued expansion in regional markets. The company's pipe volume grew 33 percent in the first half of FY20, it said. Jefferies said it views the company as a quality franchise, given its leadership in CPVC pipes, consistent launches and potential upside from adhesives.

This sentiment is shared by Edelweiss Securities, which expects the growth momentum to sustain, led by capacity expansion-led volume growth and market share gains. The brokerage said it sees sustained investment in the brand and promotions and healthy pricing power, led by a competitive edge and a large distribution network.

Foreign brokerage CLSA also retained its outperform rating on the stock, noting that the strong piping segment performance will continue to drive the growth of Astral Poly Technik. It added that the structural changes in the adhesives business are likely to be a long-term positive.

Astral Poly Technik raised the prices of Astral Poly Technik by 5 percent in September 2019 in addition to the 3 percent hike effected in August 2019 due to a rise in anti-dumping duty on CPVC resin import from China and Korea. That action by the government affected 40 percent of total CPVC supplies to India.

The impact of the price hike might get reflected in the December quarter earnings, according to the brokerages.

Astral Poly Technik was launched in 1996 with the aim to manufacture pro-India plumbing and drainage systems in the country. The company deals in plumbing pipes and fittings, sewerage drainage pipes and fittings, agricultural pipes, surface drainage system, insulation tube, fire sprinklers pipes and ancillary products. It has six plants, including two in Gujarat and one each in Tamil Nadu, Rajasthan Maharashtra and Uttarakhand.

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