ThinkStock PhotosICICI Securities has buy call on APL Apollo Tubes with a target price of Rs 1,110. The current market price of APL Apollo Tubes is Rs 942.0.
APL Apollo Tubes Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 23487.41 crore) operating in Metals - Ferrous sector.
Investment Rationale
APL Apollo (APL) has announced a minority equity investment proposal by its wholly owned subsidiary APL Apollo Mart (Apollo Mart) into ShankaraBuilding Products. APL will end up owning 9.9% of Shankara for Rs1.8 billion.
This will be through a combination of purchase of secondary promoter shares (1 million shares @Rs755/share) and proposed preferential allotment of convertible warrants (1.4 million shares @Rs750/share). Shankara was valued at 0.9x EV/sales (FY22 annualised). APL sees an opportunity to potentially double its existing sales from Shankara.
According to management, i) the investment is aligned with APL’s growth plan, ii) Shankara would be an ideal launch platform for APL’s new products, iii) there would be synergies through Shankara’s retail/wholesale network,iv) expansion of the structural steel tubes market and v) association would ensure sales consistency as Shankara is amongst APL’s key distributors.
ICICI Securities maintains BUY with a target price of Rs1,110/share. This is based on 25x FY24E P/E. The stock has seen a massive rerating in the past 18 months on the back of Tricoat acquisition, repayment of debt and steady growth.
With an improving RoE and RoCE profile (significantly higher operating leverage), higher growth driven by constant efforts towards market creation, and steady increase in market share (to reach >60% in the next 3-4 years in our view), the brokerage believes that a multiple of 25x FY24E P/E is justified.
Financials
For the quarter ended 31-12-2021, the company has reported a consolidated Total Income of Rs 3238.29 crore, up 4.62 % from last quarter Total Income of Rs 3095.28 crore and up 24.11 % from last year same quarter Total Income of Rs 2609.26 crore. Company has reported net profit after tax of Rs 127.88 crore in latest quarter.
Promoter/FII Holdings
Promoters held 34.54 per cent stake in the company as of 31-Dec-2021, while FIIs owned 24.59 per cent, DIIs 10.72 per cent.
APL Apollo Tubes Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 23487.41 crore) operating in Metals - Ferrous sector.
Investment Rationale
APL Apollo (APL) has announced a minority equity investment proposal by its wholly owned subsidiary APL Apollo Mart (Apollo Mart) into ShankaraBuilding Products. APL will end up owning 9.9% of Shankara for Rs1.8 billion.
This will be through a combination of purchase of secondary promoter shares (1 million shares @Rs755/share) and proposed preferential allotment of convertible warrants (1.4 million shares @Rs750/share). Shankara was valued at 0.9x EV/sales (FY22 annualised). APL sees an opportunity to potentially double its existing sales from Shankara.
According to management, i) the investment is aligned with APL’s growth plan, ii) Shankara would be an ideal launch platform for APL’s new products, iii) there would be synergies through Shankara’s retail/wholesale network,iv) expansion of the structural steel tubes market and v) association would ensure sales consistency as Shankara is amongst APL’s key distributors.
ICICI Securities maintains BUY with a target price of Rs1,110/share. This is based on 25x FY24E P/E. The stock has seen a massive rerating in the past 18 months on the back of Tricoat acquisition, repayment of debt and steady growth.
With an improving RoE and RoCE profile (significantly higher operating leverage), higher growth driven by constant efforts towards market creation, and steady increase in market share (to reach >60% in the next 3-4 years in our view), the brokerage believes that a multiple of 25x FY24E P/E is justified.
Financials
For the quarter ended 31-12-2021, the company has reported a consolidated Total Income of Rs 3238.29 crore, up 4.62 % from last quarter Total Income of Rs 3095.28 crore and up 24.11 % from last year same quarter Total Income of Rs 2609.26 crore. Company has reported net profit after tax of Rs 127.88 crore in latest quarter.
Promoter/FII Holdings
Promoters held 34.54 per cent stake in the company as of 31-Dec-2021, while FIIs owned 24.59 per cent, DIIs 10.72 per cent.
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