Motilal Oswal Recommends Buying This Stock For 25% Return In Near-Term

Reputed brokerage firm Motilal Oswal recommended investors to buy the stock of APL Apollo for a 25% return.

Target Price

The Current Market Price (CMP) of APL Apollo is Rs. 963. Motilal Oswal has estimated a Target Price for the stock at Rs. 1200. The stock is expected to offer a 25% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 963
Target Price	Rs. 1200
1 year return	25.00%

Company performance

Revenue stands at Rs. 22.8b (TTM), with Steel tubes/products constituting the majority of its sales. The company's sales are expected to reach Rs. 122.9 b, EBITDA is expected to reach Rs. 9.0 b, while Adj. PAT is expected to reach Rs. 5.3 b, in FY 22. the company sells over 30,000 SKUs across the entire home construction and renovation life-cycle. Under a recent investment, the total holding of Apollo Mart in Shankara after the issue of warrants will be 9.9% on a fully diluted basis, which can improve the company's business further.

Comments by Motilal Oswal

Motilal Oswal commented on the new investment, "APAT announced a minority equity investment (4.38% stake) of Rs. 1,805 M by Apollo Mart, a wholly-owned subsidiary, in Shankara Building Products through a purchase of secondary promoter shares. The investment is expected to drive margin and earnings growth and be EPS and RoCE accretive from the first year onwards. Shankara will be a launch platform for APAT's new products and help the latter focus on expanding in the structural steel tubes market. The investment will provide APAT an opportunity to sell other steel building material products through Shankara (Apollo Mart's business model)."

About the company

APL Apollo is present in 10 states, with a cumulative store base of 90 covering 0.45m sq. ft. 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. Our multi-product offerings including over 1,100 varieties of Pre- Galvanized Tubes, Structural Steel Tubes, Galvanized Tubes, MS Black Pipes, and Hollow Sections.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. 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.