Q4 and Yearly results were ahead of our expectations.

Though the reported PAT is lower than estimated but if we adjust it to forex loss of Rs. 7.3Cr, The PAT is way ahead of our estimate.

Q4 YoY increase in revenue by 25.3% to Rs. 58.0Cr was mainly driven by high volume, which increased by 48% but due to change in product mix the overall realization was down.

The EBITDA margin improved by 101 basis points to 15.4 % and EBITDA was up by 34.1% to Rs. 8.9Cr in Q4.

Depreciation and Interest increased by 83.5% and 112.3% in Q4 on account of commencement of expansion. Astral had increased the capacity during the year from 11800 MT to 26000MT.

Astral accounted for Forex loss of Rs. 4.3Cr on Foreign currency loan during the quarter. Post this forex loss PAT declined by 28.5% to Rs. 3.7Cr as against 5.2Cr in Q4FY08.

Yearly sales increased by 42.8% to Rs. 194.2Cr, EBITDA margin increased by 40 basis points to 15.8%, Depreciation increased by 89.6% and interest increased by 97.4%.

Yearly Forex loss was Rs. 7.3Cr against gain of Rs. 1.2Cr in previous year.

Because of the Forex loss Reported PAT declined by 16.9% to Rs. 14.2Cr but if we adjust it to forex loss then the PAT had increased 28.8%. The reported EPS for FY09 is Rs. 12.6 but if we adjust it to Forex loss the Adj. EPS for FY09 is Rs. 18.4.

Recent fund raising by large real estate player has created hope of revival in the sector particularly in residential sector. The low cost housing theme offered by real estate player while raising fund will drive demand and construction in near term. The 2.2 x increase in capacity buy Astral during last year will help it to capture any upcoming demand. Astral products are now well accepted by all the large builder and bathroom with CPVC pipe and fittings are 20% cheaper than conventional Galvanized pipe and fittings. Even plumbing for one bathroom can be done in 1/4th of time with CPVC as compared to Galvanized which goes well with low cost mass housing projects.

The appreciating rupee will have added advantage to Astral as it imports over 60% of its raw material requirement and has 30% of loan in forex. We expect Astral to report EPS of Rs. 22.0 FY10. The stock is available at Price earnings multiple of 7.8x FY09 adjusted EPS and 4.5x FY10E EPS. The price to book is 1.2 x FY09.

We recommend to BUY the stock with target price of Rs. 176.