The coronavirus pandemic has been very positive for one sector — pharma. And one stock that has also ridden the rally is Astec LifeSciences, a producer of pharmaceutical intermediates and agrochemicals, backed by a strong quarterly performance. In Q1FY21, the company recorded revenue of Rs.1.13 billion and net profit of Rs.161 million, compared to revenue of Rs.779.2 million and loss of Rs.11 million in Q1FY20. In Q4FY20, it reported revenue of Rs.1.85 billion and net profit of Rs.396.1 million.
Soon after the announcement of the Q1FY21 result, the stock hit its 52-week high of Rs.1,119 on July 22. The stock has been rallying ever since it hit its 52-week low of Rs.306 on March 23. Cashing in on the uptrend, managing director Ashok Hiremath has offloaded shares worth Rs.165.3 million, reducing his holding from 9.94% to 9.1%.
Meanwhile, promoter Godrej Agrovet has been gradually increasing its stake in the company. Its holding currently stands at 62.36% compared to 58.18% in the quarter ending June 2019. The parent company is understandably happy. During Godrej Agrovet’s Q4FY20 earnings call, chairman Nadir Godrej said, “In our subsidiaries, Astec LifeSciences was one of the best quarterly performances, as revenue and Ebitda grew by 35% and 66%, respectively. Higher realisation along with volume growth in key products contributed to this growth.”
According to Arijit Mukherjee, whole-time director of Astec LifeSciences, this growth is driven by the disruption caused in Chinese supply side. In the latest concall, he said, “The Chinese problem with COVID-19 started during December, which aggravated by the middle of January. So that was the advantage which came to us.” As major purchases shifted, the company was able to reposition itself and capture a big part of the market in Southeast Asia, Russia and CIS, he explains.
Meanwhile, analysts are optimistic about the company’s future prospects. According to a Motilal Oswal Securities report, Godrej Agrovet’s crop protection business is expected to be on a strong footing due to Astec’s “expertise in triazole chemistry and commencement of a new herbicide plant”. Credit rating agency ICRA also expects Astec to continue to benefit from “its established position in the fungicide market, its strong parentage and association with the Godrej Group, and continuous process improvements through its technical expertise.”
However, mutual funds have cashed out, having cut their stake from 0.26% in March 2020 to 0.08% in June 2020. FIIs, too, have reduced their holding from 0.84% to 0.55%.