This multibagger stock could rally further as HDFC Securities sees more rise
APL Apollo Tubes (APL) is India’s leading manufacturer of structural steel tubes with a capacity of 2.6 million tonnes per year (mtpa) and a pan-Indian presence. Shares of APL Apollo Tubes have outperformed by offering multibagger returns, as the stock has risen over 250% in one year and jumped over 115% in 2021 (year-to-date). Trade on ??480 per share in September 2020, the level of the multibagger share rose to ??1,875 each currently.
Its market share increased from 27% in fiscal year 2016 to 50% in fiscal year 21, thanks to a strong distribution network, a brand image, a personalized and innovative product offering and improvement. of capacity, said HDFC Securities.
In a note, the brokerage firm said that with a 50% market share, adopting the latest technology and maintaining a strong brand image, APL is one step ahead of its competition. “By using cutting edge technology, he has managed to offer personalized products in a much shorter duration than his peers, which puts him well ahead of them; we think he will continue to stay ahead, to move forward. “
HDFC Securities initiated a hedge on the share with a buy rating and a target price of ??2,226 per share. It expects APL sales and net profit to grow at a 20% / 34% CAGR in fiscal year 21-24E, driven by healthy volume growth, expansion of margins, reduced working capital and reduced debt.
“APL has succeeded in capturing the attention of fabricators and architects, making its steel tubing their first choice for applications. In addition to innovative products and offerings, APL has aggressively focused on building a strong brand image through large-scale print and TV advertising, sponsorship of mega sporting events and the arrival of celebrities in as brand ambassadors, these efforts have allowed it to successfully enter rural areas, which are yielding good results, ” the note added.
The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.
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