Buy This Stock With Rs. 960 Target Price For Good Return: Brokerage Firm

Brokerage firm Hem Securities suggests investors buying the stock of APL Apollo for a 26% return. The company's management continues to remain confident of maintaining revenue growth 20%-25% CAGR for the next 3-4 years.

Target Price

The Current Market Price (CMP) of APL Apollo is Rs. 835. Hem Securities has estimated a Target Price for the stock at Rs. 960. The stock is expected to offer a 15% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 835
Target Price	Rs. 960
1 year return	15.00%

Company performance

In Q3 FY22, APL Apollo Ltd.'s consolidated revenues came in at Rs. 3230 Crore, up 24.2% YoY and up 4.7% QoQ. Op Profit for Q3FY22 stood at Rs. 202 Crore, down 13%% YoY and -9%% QoQ. APL Apollo Ltd.'s Op margins for Q3FY22 came at 6%, -300bps YoY and -100bps QoQ. The company's PAT for Q3FY22 stood at Rs. 116 Crore, down -12% YoY and down by 11.5% QoQ. The company's management is confident of maintaining EBITDA at minimum of Rs. 5000 per tonne by FY25, and aims to reach 4 million sales volume by FY25."

Comments by Hem Securities

Hem Securities stated, "APL Apollo delivered average numbers in Q3FY22. The volatility in steel prices is a major risk but we believe the company will deliver good performance in the coming few quarters. The merger of APL and Apollo tricoat is completed but the merged entity shares are expected to trade from Q1FY23. Union budget 22-23 also focuses on improving infrastructure which can reap benefits for the company. The Company has also dispatched 10,000 tonnes of structural tubes for its Delhi hospital project."

About the company

With a capacity to produce 2.6 Million Tonnes per annum, APL Apollo Tubes Limited is the largest producer of Structural Steel Tubes in India. They have an extended distribution network of warehouses and branch offices in 29 cities across the country catering to domestic as well as 20 countries worldwide. Their multi-product offerings that include over 1,100 varieties of Pre-Galvanized Tubes, Structural Steel Tubes, Galvanized Tubes, MS Black Pipes, and Hollow Sections, making APL Apollo is one of the leading branded steel products manufacturers in India. The company has launched Apollo mart a wholly-owned subsidiary, a tech-enabled trading platform for steel building material.

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Disclaimer

The above stock was picked from the brokerage report of Hem Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.