This Midcap Metal Stock Gave 823.78% Return In 3 Yrs, Buy For 24% Gains, Say Sharekhan

Broking firm Sharekhan initiates a buy on APL Apollo Tubes Ltd. (APL) with a target price of Rs. 1,425/share. The stock is likely to give a decent return of up to 24% if purchased at the current market price. APL is a midcap metal sector stock. It is the largest producer of Structural Steel Tubes in India. It has a market capitalisation of Rs. 31,949.90 crore.

Valuation - Maintain Buy on APL with an unchanged PT of Rs. 1,425/share

According to Sharekhan, APL's presence in a niche business, first-mover advantage (introduction of innovative, first-of-its-kind products) in structural steel tubes space, and improved earnings quality (better margin/RoE profile) post the merger of Tricoat could help reduce the valuation gap with other listed building material companies (APL trades at 22x its FY2025E EPS as compared to the valuation of 50x for players such as Astral Limited). "We expect APL to sustain a high earnings growth momentum (expect EBITDA/PAT CAGR of 45%/52% over FY2023-FY2025E), supported by robust double-digit volume growth and margin expansion. Hence, we maintain a Buy rating on APL with an unchanged price target (PT) of Rs. 1,425," the brokerage has said.

Key Risks

According toSharekhan, A delayed recovery in demand from construction and infrastructure projects could hurt the earnings outlook. Any intensifying of competition from well-established steel companies could affect APL's volume growth and the working capital cycle.

Stock Outlook - Current Market Price, 52 Week Low/High, Returns

The last traded share price of APL of Rs. 1,152.05/share, down 2.35% from its previous close of Rs. 1,179.35/share. It recorded its 52-week high on 17 February 2023 at Rs. 1337.90/share, and 52 week low on 12 May 2022 at Rs. 801/share, respectively.

The stock has fallen 2.94% in the past 1 week, and 3.19% in the past 1 month, respectively. It gained 32.33% in 1 year. It has given 823.78% in the past 3 years, and 455.12% in the past 5 years, respectively.

Disclaimer - The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.