Multibagger screener: This smallcap chemical stock turns Rs 10,000 to Rs 7 lakh in just 10 years

If an investor had invested Rs 10,000 in the stock 10 years ago and stayed put, the investment would have swelled to nearly Rs 7 lakh.

However, the returns have waned in the last few years. The stock jumped 127% in the last 5 years and 230% in the last three periods.

Astec, a smallcap company with a market cap of just over Rs 2,000 crore, is engaged in the manufacturing of agrochemical active ingredients (technical), bulk, formulations and intermediate products and has a healthy sales mix of both exports and domestic sales. It has a strong export presence in 18 countries worldwide including the US and countries across Europe, West Asia.

The company also undertakes contract development and manufacturing of a wide range of agrochemicals and pharmaceutical intermediates for its multi-national clients.

Astec has an EPS of -13 on a trailing twelve month (TTM) basis and the stock is currently trading at a PE of -88.99.

According to the latest shareholding pattern available with the exchanges, promoters own a majority of the stake at 66.75%, while the rest of 33.25% lies with public shareholders.Among the public shareholders, mutual funds have about 9.15% stake, but foreign investors have no holding.

In the recent September quarter, the company reported consolidated total income of Rs 111.8 crore as compared to Rs 203.7 crore in the same period last year. Meanwhile, the loss was at Rs 13.4 crore as against a profit of Rs 18.3 crore a year ago.

Technical outlook – What should traders do?
Analysts are of the view that the stock is underperforming the overall market it is better to avoid fresh buying at current levels.

“The stock has corrected almost 50% from its lifetime high. Even the PE ratio is also trading -90. The stock has an important support near 1040 levels. Investors can buy on dips near 1100 levels with strict stop loss of 1040 for target of 1350,” said Vaibhav Kaushik, Research Analyst, GCL Broking.

“At present, the stock is underperforming the benchmark indices. Even the momentum indicator, viz. MACD is negatively poised. This clearly suggests that momentum on the downside is likely to continue. Hence, one can sell the stock at a CMP of Rs 1170 with a stop loss of Rs 1230 for a target of Rs 1050–1000 levels in the next couple of weeks,” said Mileen Vasudeo, Sr Technical Analyst, Arihant Capital.

With data inputs from Ritesh Presswala

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)