Astec Lifesciences zooms 37% in two days on heavy volumes

Shares of Astec Lifesciences (Astec) surged 14 per cent to Rs 1,474.20 on the BSE in Friday’s intra-day trade on the back of heavy volumes. In the past two trading days, the stock of the pesticides & agrochemicals company has zoomed 37 per cent. In comparison, the S&P BSE Sensex was up 2 per cent during the same period.

At 01:07 pm; the stock was up 10 per cent as against a 1.5 per cent rise in the benchmark index. The average trading volumes on the counter jumped over three-fold today. A combined around 560,000 shares changed hands on the NSE and BSE.
 

With the rally in the past two days, the stock has bounced back 40 per cent from its 52-week low of Rs 1,050 touched recently on Tuesday, March 28. It has more-than-halved from its 52-week high level of Rs 2,285.65, hit on November 17, 2022.

Astec is engaged in the manufacturing of agrochemical active ingredients (technical), bulk, formulations and intermediate products. Astec has a healthy sales mix of both exports and domestic sale.

For first nine months (April-December) of financial year 2022-23 (9MFY23), the company reported 34.7 per cent year-on-year (YoY) declined in profit after tax of Rs 30.6 crore as compared to Rs 46.8 crore in the same period last year. Revenue, however, grew 25.3 per cent YoY at Rs 511.70 crore.

Earnings before depreciation, interest and taxes (EBITDA) was down 11.9 per cent YoY at Rs 81.30 crore. EBITDA margin contracted 670 bps to 15.9 per cent in 9MFY23 as compared to 22.6 per cent in 9MFY22.

Astec said the company’s key products witnessed sluggish demand and lower realization in most of the markets. However, CMO sales grew 2.8x YoY partly offsetting the decline in volumes from enterprise business.

De-growth in domestic sales by 11 per cent YoY in 9MFY23 was due to focus on exports business amidst sluggish demand in domestic markets and better realisations in exports.

ICRA has revised outlook on the long-term ratings of Astec to stable from positive. The rating action reflects ICRA’s expectations that its near-term operating performance is likely to remain constrained on account of challenges faced in its key product segments of triazole fungicides.

With higher than average channel inventory in these product segments in domestic and overseas markets on account of multiple reasons over the recent past (such as lower liquidation, unfavourable weather conditions and destocking strategies), the volume off-take as well as realisations have been muted over the past few months, and expected to remain so over the near-term till the situation normalises.

Coupled with continued debt-funded capex, the credit metrics of the company are unlikely to materially improve over the near term. Nevertheless, ICRA notes that the company is commissioning a research and development (R&D) center in the coming months, and expanding its presence in the higher margin contract development and manufacturing (CDMO) segment so as to mitigate the risks related to product concentration and protect itself from the volatilities of the commoditised enterprise market, the rating agency said in rating rationale. CLICK HERE FOR DETAILS