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Multi Baggers

Ventura Securities

12.00 AM Mar 31st 2015

Astec Life

BSE ID : 533138     NSE ID : ASTEC

RECOMMENDED PRICE 140.60

PEAK FROM RECO 694.80 394.17%

CURRENT PRICE 575.15 309.07%

Astec LifeSciences is an Indian manufacturer of agrochemical active ingredients, formulations and intermediate products. We initiate coverage on Astec LifeSciences as a BUY with a Price Objective of Rs. 210.

Astec LifeSciences Ltd. (ASL) is an Indian manufacturer of agrochemical active ingredients, formulations and intermediate products. Until FY12 Astec operated only in one segment i.e. Enterprise Sales where it produced and sold active ingredients and bulk formulations. The company stepped up its expansion journey in FY13 when it broadened its business activities by venturing into two new verticals viz, Contract Manufacturing Operations and Enterprise Sales.

Contract Manufacturing Operations (CMO): Under this segment Astec manufactures key Fungicide and Herbicides outsourced by other major companies. It is a high margin segment and Astec expects this segment to drive the growth in coming years. Sales from CMO are expected to grow at 63.4 percent CAGR from 35.4 crores in FY14 to 153.48 crores by FY17E.

Enterprise Sales (ES): Contributing 75 percent of the Total Revenue, ES is currently the mainstay of ASL. The revenue from ES is expected to grow steadily at 9.3 percent CAGR on higher base as company expects to develop and market technically advanced products in coming years.

Expansion of business activities coupled with margin improvement leads us to believe that the growth momentum of Astec LifeSciences will continue. We expect Astec LifeSciences to report three year net revenue CAGR of 23.4 percent to `388.8 crores by FY17. We expect PAT to increase at a 3 year CAGR of 54.5 percent to `32.0 crore in FY17 and the company to report an EPS of `17.8 in FY17.

We initiate coverage on Astec LifeSciences as a BUY with a Price Objective of Rs. 210 representing a potential upside of approx. 50 percent over a period of 24 months. The target price is arrived at by assigning a PE multiple of 12x on FY17 EPS of `17.8. At the CMP of Rs. 140, the stock is trading at a PE multiple of 7.9x FY17E.

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Disclosures & Disclaimer: Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. RA involved in the preparation of this research report discloses that he / she has not served as an officer, director or employee of the subject company. RA involved in the preparation of this research report and VSL discloses that they have not been engaged in the market making activity for the subject company. Our sales people, dealers, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. We may have earlier issued or may issue in future reports on the companies covered herein with recommendations/ information inconsistent or different those made in this report. In reviewing this document, you should be aware that any or all of the foregoing, among other things, may give rise to or potential conflicts of interest. 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Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document. The projections and forecasts described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. Projections and forecasts are necessarily speculative in nature, and it can be expected that one or more of the estimates on which the projections and forecasts were based will not materialize or will vary significantly from actual results, and such variances will likely increase over time. All projections and forecasts described in this report have been prepared solely by the authors of this report independently of the Company. These projections and forecasts were not prepared with a view toward compliance with published guidelines or generally accepted accounting principles. No independent accountants have expressed an opinion or any other form of assurance on these projections or forecasts. You should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by VSL, its associates, the authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions underlying such projections and forecasts. The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. 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AstecLifesciences_VenturaSec_MultibaggerPYT.pdf

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