Motilal Oswal estimates 20%/35% revenue/PAT CAGR over FY21-24E led by increasing EBITDA/MT and higher sweating of assets. It values the stock at 35x Sep’23E EPS
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var titStr=”;var editw=”; var typevar=”; var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’); var phead =’Why add to Portfolio?’; if(secglbVar ==1) { var stkdtxt=’this stock’; var fltxt=’ it ‘; typevar =’Stock ‘; if(lastRsrs.length>1){ stkdtxt=’these stocks’; typevar =’Stocks ‘;fltxt=’ them ‘; } } //var popretStr =lvPOPRHS(phead,pparr); //$ (‘#poprhsAdd’).html(popretStr); //$ (‘.btmbgnwr’).show(); var tickTxt =’‘; if(typparam1==1) { var modalContent = ‘Watchlist has been updated successfully.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //var existsFlag=$ .inArray(‘added’,newappndStr[1]); //$ (‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’); //if(existsFlag == -1) //{ // if(lastRsrs.length > 1) // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’); // else // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’); // //} } //$ (‘.accdiv’).html(”); //$ (‘.accdiv’).html(appndStr); } }, //complete:function(d){ // if(typparam1==1) // { // watchlist_popup(‘open’); // } //} }); }); } else { var disNam =’stock’; if($ (‘#impact_option’).html()==’STOCKS’) disNam =’stock’; if($ (‘#impact_option’).html()==’MUTUAL FUNDS’) disNam =’mutual fund’; if($ (‘#impact_option’).html()==’COMMODITIES’) disNam =’commodity’; alert(‘Please select at least one ‘+disNam); } } else { AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function pcSavePort(param,call_pg,dispId) { var adtxt=”; if(readCookie(‘nnmc’)){ if(call_pg == “2”) { pass_sec = 2; } else { pass_sec = 1; } var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’; $ .ajax({url:url, type:”POST”, //data:{q_f:3,wSec:1,dispid:$ (‘input[name=sc_dispid_port]’).val()}, data:{q_f:3,wSec:pass_sec,dispid:dispId}, dataType:”json”, success:function(d) { //var accStr= ”; //$ .each(d.ac,function(i,v) //{ // accStr+=”+v.nm+”; //}); $ .each(d.data,function(i,v) { if(v.flg == ‘0’) { var modalContent = ‘Scheme added to your portfolio.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //$ (‘#acc_sel_port’).html(accStr); //$ (‘#mcpcp_addportfolio .form_field, .form_btn’).removeClass(‘disabled’); //$ (‘#mcpcp_addportfolio .form_field input, .form_field select, .form_btn input’).attr(‘disabled’, false); // //if(call_pg == “2”) //{ // adtxt =’ Scheme added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //else //{ // adtxt =’ Stock added to your portfolio We recommend you add transactional details to evaluate your investment better. x‘; //} //$ (‘#mcpcp_addprof_info’).css(‘background-color’,’#eeffc8′); //$ (‘#mcpcp_addprof_info’).html(adtxt); //$ (‘#mcpcp_addprof_info’).show(); 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APL Apollo Tubes share price was up more than 3 percent in the afternoon trade on September 7. The stock, which has surged over 250 percent in the last year, was trading at Rs 1,755.25, up Rs 52.85, or 3.10 percent. It touched an intraday high of Rs 1,774.95 and an intraday low of Rs 1,720.65.
Domestic research and broking firm Motilal Oswal has initiated coverage on the stock, with a “buy” recommendation and has a price target of Rs 2,065 a share.
APL Apollo Tubes is the largest manufacturer of structural steel tubes in India that are used in residential and commercial buildings, warehouses, factories and other infrastructure works.
It enjoys around 50 percent market share in India, and operates through a network of 10 plants, over 800 distributors, more than 1,500 SKUs, and 200,000 fabricators serving over 50,000 retailers.
The brokerage firm estimates 20 percent/35 percent revenue/PAT CAGR over FY21-24E led by increasing EBITDA/MT and higher sweating of assets.
“We value the stock at 35x Sep’23E EPS to arrive at a target of Rs 2,065 and initiate coverage with a buy rating,” it said.
Motilal Oswal expects strong volume growth and improved profitability due to higher demand across product segments, launch of new products under the parent company. The newly merged entity Tricoat, with robust distribution network, will lead to an increase in market share along with greater cross-selling opportunity from the merger, and increase in the share of VAP is driving margin and profitability.
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“We expect APAT to deliver 20%/26%/35% consolidated revenue/EBITDA/PAT CAGR to ~Rs 14800 crore /Rs 1,360 crore/Rs 900 crore and generate strong cumulative CFO/FCF of Rs 3130 crore/ Rs 2080 crore over FY21-24E. It is expected to turn net cash positive by FY23E. APAT’s peers (in the Building Material space) trade at an average FY23E forward P/E of 36x,” it said.
“The stock should fetch similar valuation as its peers in the building material space due to its leadership and low-cost position in the structural tubes business, strong return ratio profile, and lower working capital days,” it added.
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