APL Apollo Tubes share hit a fresh 52-week high after domestic brokerage firm Motilal Oswal Financial Services initiated coverage on the stock with a buy call.
The brokerage has fixed a target price of Rs 2,065.
Motilal Oswal sees a stellar volume growth and improved profitability for the firm due to higher demand across product segments, launch of new products and robust distribution network.
Buoyed by the coverage from the brokerage, the stock touched 52 week high of Rs 1,874.9, rising 6.21% against previous close of Rs 1,765.25 on BSE.
The share gained 8.59% in the last 3 days. APL Apollo Tubes share is trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
The share has climbed 276% in one year and risen 108% since the beginning of this year. Market cap of the firm rose to Rs 23,026 crore on BSE. Total 0.30 lakh shares changed hands amounting to turnover of Rs 5.52 crore on BSE.
“We expect the company to deliver 20 percent/26 percent/35 percent consolidated revenue/EBITDA/PAT CAGR to nearly Rs 14,800 crore/Rs 1,360 crore/Rs 900 crore and generate strong cumulative CFO/FCF of Rs 3,130 crore/Rs 2,080 crore over FY21-24E,” said Motilal Oswal. “We value the stock at 35 times September 23E EPS and arrive at our target price of Rs 2,065.”
The stock should fetch similar valuation as its peers in the building material space, due to its leadership and low-cost position in the structural tubes business, strong return ratio profile, and lower working capital days, it said.
The firm reported a huge 778.13% rise in June quarter net profit at Rs 147.35 crore against profit of Rs 16.78 crore in the corresponding period of previous fiscal.
Sales zoomed 128% to Rs 2,534.28 crore in Q1 against Rs 1,109 crore in the corresponding period of previous fiscal.