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Vijay Kedia bets on Astec Lifescience

Our Master Portfolio Member Vijay Kedia has put his latest bet on Astec Lifescience, a producer of agrochemicals and pharmaceutical intermediates.  According to the latest share holding pattern, Vijay Kedia bagged 2,00,000 shares which comes to 1.028% of the total shares. Astec manufactures a wide range of Agrochemical active ingredients and pharmaceutical intermediates. Company has forged enduring relationships with large and small companies all over the world. 

Let’s check what all could be the reason for Vijay Kedia to pick this stock even though it has ran up a lot in last one year, from sub 100 levels to Rs 300. The stock has recently corrected and now trading at Rs. 244.

  • Astec is a leader in Triazole fungicides and has a portfolio of fungicide and herbicide technical products for Indian and global markets.
  • The Company has 214 product registrations across 32 countries including 139 product registrations in India.
Steady Increase in OPM for the last 5 years
  • Astec’s strong multi-year relationships with its customers are testament to the high degree of customer satisfaction enjoyed by the Company. The company has not lost a customer since inception and all customer relationships have grown consistently over the years.
  • Through its 100% subsidiary Astec Crop Care Pvt. Ltd, the Company markets and distributes branded agrochemical formulations in India
  • The Company has 2 multiproduct plants in Mahad, Maharashtra and an R&D site, manufacturing and pilot plant in Dombivli near Mumbai.
  • Astec has a strong pipeline of products under development and intends to launch 2 – 3 new products annually with an emphasis on process innovation and IP generation to create a sustainable advantage and deliver strong revenue growth.
Steady Increase in PAT for last 4 years
  • The Indian Agrochemical Industry is estimated at INR 263 billion (~USD 4.4 billion) in 2014 and is expected to grow at a CAGR of 12% between 2014 and 2019.
  • Fungicides and herbicides are expected to drive future growth due to rapidly growing demand for fruits and vegetables and rising cost of agricultural labor.
  • Promoters have over 35 years of experience in the Agrochemical sector and have successfully built a profitable, fast growing agrochemical business with proven execution credentials.

Looking at the business model and current opportunities in world wide agriculture market, this pick of Vijay Kedia seems to be sensible. Lets wait and see if the stock can keep the growth momentum going forward.

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