APL Apollo Tubes Initiating Coverage Report By Emkay
| APL Apollo Tubes Initiating Coverage Report By Emkay | |
| Company: | APL Apollo Tubes |
| Brokerage: | Emkay |
| Date of report: | November 3, 2017 |
| Type of Report: | Initiating Coverage |
| Recommendation: | Buy |
| Upside Potential: | 52% |
| Summary: | Poised to steel the march in a new avatar |
| Full Report: | Click here to download the file in pdf format |
| Tags: | APL Apollo Tubes, Emkay |
| Rapidly scaling revenue; Initiate at BUY – Initiate BUY on this midcap and under-researched name, TP Rs2,812. APAT, a specialized steel processor, would double its profits and improve its ROCE to 30.5% from 20.6% by FY20. The stock is undervalued at PER of 13x FY20E. – APAT is No. 1 steel pipe maker with 13% domestic market share. We are confident that this would rise to 17% by FY20. APAT has managed to grow revenues faster than the sector (5Y CAGR of 27% vs the sector’s 9%) due to its core strategy which is focused on innovation, branding/distribution and capacity expansion. Its earnings expanded at 24% CAGR during the same period. APAT is now increasing its capacity by 54% this year. – APAT’s earnings are insulated to steel’s cyclical nature. Most of APAT’s 400 products are specialized and are used in high-growth sectors. The stock should not be looked as a steel sector play but a bet on India’s construction/infrastructure/agriculture push. Our TP offers 52% potential upside and is based on PER of 20x FY20E |
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