Ok here is my thesis behind it
1)Apl apollo Consumes 2% of entire Indian steel production and is the single largest buyer so it get 2-3% discount on HRC steels from tata/ jindal as compared to its competitor.
2) It has 11 manufacturing units and 29 warehouses which ensures lower logistics cost by 4-8% as compared to its competitor(freight heavy items).
3)Lowest cost producer because of economies of scale.
4) Capable of Passing the prices of fluctuation of raw material(Concall)
5) Company has differentiated product portfolio and in 40-50% of its product portfolio it doesn’t face any competition as it is the only producer. it has close to 1100+ sku’s
6) Introducing high margin product in upcoming Raipur plant thus ebita per ton will improve.
7) From financials point of view it has Good sales and profit growth which is above 25% and is trading at an p/e of 36(when i purchased it ).A good growth company at a p/e of 36 seems good to me .
Many think it falls into cyclical category but if you look at 5 or 10 year CAGR sales and profit growth it is constantly growing at 25% . I think it should fall under fast grower category .
| Subscribe To Our Free Newsletter |
