Multibagger steel stock rose 65% from 52-week low; can it cross Rs 1,900 mark?

Shares of APL Apollo Tubes Ltd have recovered 65% from their 52 week low in less than a year. APL Apollo Tubes stock hit a 52-week low of Rs 990 on November 10, 2022. In the current session, the stock rose to Rs 1635 today, delivering 65% returns from yearly low. The iron and steel stock is also a multibagger delivering over 468% returns in the last three years.

The stock closed at Rs 1602.45 in the previous session. It gained 2.59% intraday today to Rs 1644 on BSE. APL Apollo Tubes stock has gained 50% this year and risen 49% in a year.

The stock hit a 52-week high of Rs 1806.20 on September 6, 2023. A total of 2696 shares of the firm changed hands, amounting to a turnover of Rs 44.10 crore on BSE. The market cap of the company rose to Rs 45,593 crore on BSE. APL Apollo Tubes stock has a one-year beta of 0.6, indicating very low volatility during the period.

In terms of technicals, the relative strength index (RSI) of APL Apollo Tubes stands at 48, signaling it's trading neither in oversold nor in the overbought zone. The stock is trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day and 200 day moving averages but lower than the 30 day moving averages.

IDBI Capital has a hold rating on the stock.

“APL Apollo Tubes reiterated that it targets sales volumes at 5 mtpa by FY26 of which 70% will be from value added products. We now value the stock at a PER of 35x (Earlier 33x) FY25 EPS to derive a target price of Rs 1,584 (earlier Rs 1,494) and continue to maintain HOLD rating,” the brokerage said.

ICICI Securities has revised its target price to Rs 1,930 from the earlier Rs 1,740.

“Our visit to APL’s Raipur plant reveals that growth drivers are in place for the company. Management has launched two new categories: 1) 500mm x 500 mm in the heavy structural segment; and 2) coated products for roofing application. We believe that as capacity utilisation at the Raipur plant improves, EBITDA/te is also expected to improve Rs 5,000/te in FY25E (our estimate at Rs 5,130/te). Taking cognizance of robust growth prospects, we raise our P/E multiple to 40x (earlier 36x) FY25E, resulting in revised TP of Rs 1,930 (earlier Rs 1,740). Maintain ‘BUY’,” said the brokerage.

Motilal Oswal has maintained its buy rating on the stock.

“The incremental capacity from upcoming plants and debottlenecking, along with the addition of high-margin products from the Raipur unit, should result in strong volume growth and margin expansion going ahead. We project a revenue/EBITDA/PAT CAGR of 25%/43%/50% over FY23–25. We value the stock at 33 times September’25E earnings per share to arrive at a target price of Rs 1,930. We maintain our BUY rating on the stock,” said the brokerage.

In a latest development, the company reported its highest quarterly sales volume in the September quarter. In a business update, the company said its logged a 12 percent growth in sales volume at 6.74 lakh tonne in the second quarter from the year-ago period.

APL Apollo Tubes Limited is the largest producer of structural steel tubes in India. It has an extended distribution network of warehouses and branch offices in 29 cities across the country catering to domestic as well as 20 countries worldwide. The Delhi-based firm offers 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 leading branded steel products manufacturers in India.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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