This Mid-Cap Steel Stock Zooms 648.64% In 3 Years, Gets 'Buy' Rating From Motilal Oswal

Motilal Oswal has a "buy" rating on APL Apollo Tubes with a target price of Rs 1,490. The brokerage firm believes that the company is well-positioned to benefit from the structural growth in the steel industry and the increasing demand for pipes in the construction and infrastructure sectors. Motilal Oswal also expects the company to benefit from its strong brand and distribution network.

APL Apollo Tubes is a mid-cap company that is the largest producer of structural steel tubes in India. Recently, this mid-cap company posted its quarterly performance and announced a final dividend of Rs 5 per equity share of the face value of Rs 2 each (250%) for the financial year ended 31st March 2023.

Based on the progress of the mid-cap company and the potential growth as per the industry, the stock-broking firm has suggested investors to buy the stock as it can rise by approximately 31%.

Here are some of the key reasons for Motilal Oswal's bullish rating on APL Apollo Tubes:

• APAT currently has inquiries for ~45 projects with visibility of ~42m square feet, where ~0.22MMT of heavy structural steel tubes will be needed.

• The structural tube market in India is ~8MMT and is expected to rise to ~30MMT in the longer run.

• APAT is playing a vital role in the market creation of structural tubes across various applications including MS black, galvanized tubes, pre-galvanized tubes and hollow sections.

• The company has a strong brand and distribution network.

Overall, Motilal Oswal believes that APL Apollo Tubes is a good investment for investors looking for exposure to the structural growth in the steel industry and the increasing demand for pipes in the construction and infrastructure sectors.

View & Rating

"We project a revenue/EBITDA/PAT CAGR of 15%/35%/40% over FY23-25. We value the stock at 33x FY25E EPS to arrive at a target price of Rs 1,490. Maintain BUY," Motilal Oswal added.

Stock Price Movement

The latest stock price of the company has rallied 3.09% to Rs 1,170.80 per share on an intraday basis. In the last one year, the share price has grown by 20.64% while over three years, it has zoomed by 648.64%.

Disclaimer

The stock has been picked up from the brokerage report of Motilal Oswal. Greynium Information Technologies, the author or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.