The multibagger stock has gained 103% this year. Motilal Oswal rises further

India’s leading structural steel tube manufacturer APL Apollo’s multi-product offerings includes a range of Pre-Galvanized Tubes, Structural Steel Tubes, Galvanized Tubes, MS Black Pipes and Hollow Section, making APL Apollo one of the leading branded steel product manufacturers in India. is one.

Domestic brokerage Motilal Oswal has started coverage on APL Apollo (APAT) with ‘Buy’ rating and the multibagger stock is seeing further gains. It expects strong volume growth and improved profitability on account of higher demand across product segments, launch of new products under parent company and newly merged entity: Tricot, strong distribution network, thereby increasing market share as well as cross – Selling opportunity has increased. Mergers, and an increase in the share of VAPs are driving margins and profitability.

“APAT’s diversified product portfolio and pan-India presence concentration helps mitigate risk. Higher sweating of assets (capacity utilization at 63%) will lead to operating leverage and better profitability. Strong distribution network, with warehouses, high retail network and SKUs is expected to improve last-mile connectivity,” Motilal Oswal said in a note on Tuesday.

The buy rating of the brokerage comes with a target price ₹2,065 per share. It expects the stock to achieve similar valuations to its peers in the building materials space, due to its leadership and low cost position in the structural tube business, strong return ratio profile and short working capital days.

Tricot’s recent merger with APAT is expected to improve sales volume owing to new cross-selling opportunities and higher consolidated advertising spend, which is likely to improve its brand presence and image.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.