Multibagger Stocks: APL Apollo Tubes, a prominent company specializing in structural steel tubing, recently reached a historic high in its share price, just two days ago. Remarkably, it has not only transformed investors into millionaires over the past decade but has also demonstrated its potential for generating substantial returns in the short term. Within a span of only ten months, it surged by more than 82%, reaching its all-time high. While it has retraced slightly, declining by 5% from this peak, market experts are viewing this as an opportune moment to consider an investment.
Sharekhan, a domestic brokerage firm, suggests that the stock could potentially witness a 17% upswing from its present value. Currently, the stock is trading at ₹1,715.15. This is a far cry from its value on September 13, 2013 when APL Apollo Tubes shares were available for just ₹15. Presently, the stock stands at ₹1,715.15, reflecting an astonishing 11,334% increase in a mere decade.
However, APL Apollo Tubes’ performance isn’t limited to the long term alone; it has also delivered impressive gains in the short term. On November 10, 2022, the stock was trading at ₹990 per share, but within ten months, it had surged by more than 82% to reach a record high of ₹1,806.20 on September 6, 2023. Currently, it has experienced a 5% decline from this peak.
APL Apollo Tubes is the largest manufacturer of structural steel tubing in the country. Its applications in government projects, infrastructure development, and the healthcare sector are growing rapidly, and by the fiscal year 2030, it could potentially double its capacity to 16 metric tons. Its market share in the nation’s steel consumption is expected to increase from the current 6% to 8%.
Looking ahead to APL Apollo Tubes’ prospects, the company is focused on expanding its capacity to 5 metric tons by the fiscal year 2025 and 10 metric tons by 2030, positioning itself to capitalize on the increasing demand for structural steel tubing. Sharekhan predicts that the company’s volume could grow by 27% annually between 2023 and 2026.
Furthermore, the value-added products (VAP) mix, which currently stands at 57%, could potentially rise to 70% by 2025. VAPs offer higher margins, ranging from ₹6,000 to ₹8,000 per ton, compared to APL Apollo’s existing margins of ₹4,500 per ton. Consequently, the EBITDA margin could reach ₹6,017 per ton by 2026.
Sharekhan anticipates that the net profit of APL Apollo Tubes could increase by 45% annually between 2023 and 2026. Taking all these factors into account, the brokerage firm has maintained its buy rating with a target price of ₹2,000.
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