Over 8,000% return in 10 years! Here's what Motilal Oswal says on APL Apollo Tubes

Shares of APL Apollo Tubes (APAT) have delivered over 8,000 per cent return in the last 10 years. The multibagger stock is up over 980 per cent in the last 5 years. The stock ended 0.74 per cent higher at Rs 1587 on BSE on April 4, 2024, and has recovered over 50 per cent from its 52-week low of Rs 1,046.55.

As an investor, you must be wondering what's next for this multibagger stock. Motilal Oswal, in its recent report, has reiterated its 'Buy' rating with a target price of Rs 1,800.

However, considering the weak sales volume in the second half of FY24 and the muted demand outlook in the near term, it cut the FY24 EPS by 5 per cent. Consequently, it has also reduced the FY25/FY26 EPS estimates marginally by 4 per cent each.

Based on our channel checks, the brokerage firm anticipates that the overall demand scenario will continue to remain weak due to a slowdown in construction activity. The demand is likely to weaken further during the general election period owing to a delay in government projects and infrastructure spending.

"APAT is likely to witness near-term pain on account of an unfavourable demand scenario. However, we believe it will bounce back strongly after the general elections aided by the resumption of infrastructure spending and restocking of inventory by the dealers," it said.

In the longer term, Motilal Oswal believes that APAT would sustain its earnings momentum on the back of growing demand across segments, increased product penetration with a robust distribution network, rapid capacity expansion, an increase in the share of VAP, thus driving margins, and its market leadership.

About APL Apollo Tubes Limited

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 one of the leading branded steel product manufacturers in India.

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