Astec Lifesciences Hits Record High Amid Weak Market, Shares Up 24% in 3 Days - Equitypandit

2022-10-15 01:56:56 By : Mr. Andy Chong

Shares of Astec Lifesciences surged 14% in intraday trading on Thursday, hitting an all-time high of Rs 2,274.55 per share in an otherwise weak market. Shares of the pesticide and agrochemical company surpassed the previous high of Rs 2,178.85 set on July 20, 2022. The stock has surged 24% over the past three sessions.

At 10.28 am, it was trading 7% higher at Rs 2,145, while the S&P BSE Sensex was down 0.65%. Also, it has gained 76% in a year, while the benchmark index has lost 6%. Certainty Herbicide

Astec is engaged in manufacturing agrochemical active ingredients (technologies), bulk, formulations and intermediate products. Astec has a healthy export and domestic sales mix. They are exported to more than 25 countries, including the United States and European, Western, Southeast and Latin American and African countries.

In the July-September quarter (Q1FY23), Yadak reported a strong 44.4% year-on-year increase in total revenue to Rs 187 crore on the back of higher selling price realisation and CMO volume. On the other hand, CMO sales accounted for 16% of total revenue in the first quarter of fiscal 2023. The company didn’t have any CMO sales in the first quarter of last year.

However, strong top-line results, which accounted for about 20% of first-quarter revenue, were marred by delayed sales into the next quarter. As a result, profit after tax in the first quarter of FY23 fell by 12.2% YoY to Rs 11.4 crore. Yada is one of the leading companies in the field of triazole fungicides. With its established market reputation and newly commissioned herbicide plants, it is well-positioned to take full advantage of market opportunities at home and abroad.

Work on the company’s new R&D centre remains on schedule and is expected to be completed in FY23. The company will also commercialise two new CMO products this year. Once live, it will power a fast-growing contract development and manufacturing (CDMO) business and attract many innovators worldwide.

While a healthy demand scenario, especially in overseas markets, boosted the company’s top line, cost optimisation measures such as backward integration and a stable supply of raw materials at cost-effective prices supported improvement in operating profit margin (OPM), believe ICRA’s analysts.

Going forward, analysts expect exports to increase their share of the revenue pie and Astec’s plans for higher business diversification.

Additionally, the company commercialised its herbicide plant in August 2021. Hence, the incremental revenue contribution from this new business segment is expected to provide the company with higher diversification in the medium term.

Yada has a solid track record in the agrochemical business for over 20 years. With strong technical strength, the company has become one of the preferred suppliers of industrial-grade fungicides for well-known customers such as large multinational companies at home and abroad.

“Furthermore, the company’s investment in a new state-of-the-art R&D centre is expected to significantly enhance its R&D capabilities, enabling it to develop new products and benefit from the opportunities that a shift in global demand from China could bring to India. In addition, Yada will gain access to the Efforts to achieve greater business diversification in herbicide manufacturing are expected to provide incremental revenue growth over the medium term,” ICRA said in a report.

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