APL Apollo Tubes Ltd
Manufacture of Infrastructure Products
FV – Rs 10; 52wks H/L – 899/367; TTQ – 2389; CMP (May 30, 2016) – Rs 888;
Market Cap – Rs 2081 Crs

Consolidated Financials and Valuations for 9MFY16 (Amt in Rs Crs unless specified)

Equity  Capital	Net worth	Long Term Debt*	Total   Sales	PAT	BV  (Rs)	TTM EPS (Rs)	TTM P/E	Industry  P/E	P/BV	Promoter’s Stake	Beta
23.44	545	231	2929	73	232	34.02	25.93	24.35	3	40.64	1.29

 

Consolidated Financials and Valuations for FY15 (Amt in Rs Crs unless specified)

Equity Capital	Net worth	Long Term Debt	Total   Sales	PAT	BV  (Rs)	EPS  (Rs)	P/E	P/BV
23.44	472	142	3014	64	201	27.3	32.3	4.34

 

The share price has increased by 125% since we last covered the scrip on March 13, 2015 (Rs 394 per share).

It has moved up by 30% in the last two months from Rs 687 (30/3/16) to Rs 888 (30/5/16).

 

Recent Updates

• A new plant has been set up at Raipur, Chhattisgarh with total capital outlay upto Rs 75 Crs. The plant will manufacture galvanized steel tubes, hollow section and galvanized sheets having a total capacity of 60000 MTPA. The Company expects to commence operations at Raipur plant by Q1 of FY18.

Bulk Deals

Date	Client	Transaction	Quantity	Traded Price (Rs)
17-Dec-2015	INTEGRATED MASTER SECURITIES PRIVATE LIMITED	BUY	196450	769.51
17-Dec-2015	R.B.A. FINANCE& INVESTMENT CO.	BUY	235000	752.50
17-Dec-2015	SANJAY GUPTA HUF	SELL	210000	752.58
17-Dec-2015	SANJAY GUPTA	SELL	196450	769.49
17-Dec-2015	INTEGRATED MASTER SECURITIES PRIVATE LIMITED	SELL	196450	752.35
11-Dec-2015	FIL INVESTMENTS (MAURITIUS) LIMITED	SELL	157409	613.83
06-Apr-2015	HDFC MUTUAL FUND	BUY	160000	421.00
31-Mar-2015	HDFC MF Prudence Fund	BUY	160371	392.00
10-Mar-2015	EMBLEM FII	SELL	200000	365.15
10-Mar-2015	HDFC MUTUAL FUND	BUY	196000	365.05
03-Mar-2015	HDFC M F A/C HDFC GROWTH FUND	BUY	568500	350.65
03-Mar-2015	APOLLO PIPES LIMITED	SELL	300000	350.02

 

 

 

Block Deals

Date	Exchange	Quantity	Price	Value(Cr)	Time
17-12-2015	BSE	130053	753.50	9.8	12:18
17-12-2015	BSE	96496	770.25	7.43	12:29
17-12-2015	BSE	100000	769.00	7.69	12:29
17-12-2015	BSE	80000	752.50	6.02	12:18
17-12-2015	BSE	130000	752.00	9.78	12:18
16-12-2015	BSE	85000	685.50	5.83	10:55
11-12-2015	NSE	100678	610.00	6.14	13:04
11-12-2015	BSE	100585	610.00	6.14	13:04
11-12-2015	BSE	100000	610.00	6.1	10:20
10-12-2015	NSE	95747	590.00	5.65	14:32
09-12-2015	BSE	115000	580.00	6.67	15:17
09-12-2015	NSE	89000	580.00	5.16	14:43
10-03-2015	BSE	200000	365.00	7.3	11:05
03-03-2015	NSE	832875	355.00	29.57	14:56

 

Updates when the stock was last covered on March 13, 2015:

• HDFC Mutual Fund bought 196000 equity shares close to about 0.83% stake in APL Apollo Tubes on March 10, 2015 ~ APL Apollo Tubes hits record high; HDFC MF buys shares
• ICRA upgraded APL Apollo Tubes for long – term from [ICRA]A- to [ICRA]A and reaffirmed the short-term rating of [ICRA]A1 for Company’s credit facility.
• The Company launched a new product ~ steel door frames ~ which has a double life expectancy as compared to wooden door frames and costs 40% less. The product launch is in line with Prime Minister Narendra Modi’s affordable housing program. The Company has also taken the patent from the Patent Office of Govt. of India. ~ BSE Extracts

 

Overview

• APL Apollo Tubes Ltd is engaged in manufacturing and exporting of steel pipes and tubes. It was incorporated in the year 1986 and is headquartered in Delhi.
• It operates in the steel tubes and pipes market specifically in the Welded Segment.
• The Company manufactures a range of steel products ERW black tubes and pipes, such as hot-dipped galvanized and pre-galvanized tubes, hollow sections and structural. It is the only player manufacturing black, galvanized and pre-galvanized products.
• The current capacity of APL Apollo is about 1.05 million tonnes.
• The Company markets its product under the brand APL Apollo which covers MS Black, G.I. round pipes and hollow sections both in rectangular and square quality rolled on high frequency induct weld (HFIW) mills.
• The Company focuses on supplying tubes for applications in the engineering sector, idler tubes for conveyors, propeller shaft tubes and bobbin tubes for textile industry with applications where high precision diameter is required and other high rotational applications.
• The Company also manufactures CPVC pipes, uPVC pipes, uPVC SWR Drainage system, uPVC plumbing system, well casing and screen pipes and HDPE drip irrigation system, among others.
• It serves Metal Engineering & Fabrication, Electric Poles, Ports, Railways, Aviation, Oil & Gas, Metros, Solar Power, Automobile sectors.
• It has 300 stock keeping units (SKUs), largest in the industry. It has 6 manufacturing units including a new greenfield plant in Hosur, Tamil Nadu. It is also acquiring two units in Bangalore and Mumbai. Its plant in Hosur is close to JSW Steel, the market it serves.
• The Company has three wholly-owned subsidiaries ~ Shri Lakshmi Metal Udyog Limited, Lloyds Line Pipes Limited and Apollo Metalex Private Limited.
• Hollow sections form 35% of the revenue mix while MS-Black and Pre-galvanized contribute 25% each and the rest comes from Galvanized tubes. From a margin perspective, pre-galvanized tubes have the highest margin of about 13-15% while MS-Black have more modest margins in the region of 4-6%

 

Key Growth Drivers for the Steel industry:

1. Smart Cities
2. Ganga Action Plan
3. Agriculture
4. Infrastructure Buildout

 

Equity Unquoted Investments as on March 31, 2014:

Investment Company Name	No of Equity Shares	Cost of Investments (Rs Crs)
Apollo Metalex Pvt Ltd	2711100	7.21
Shri Lakshmi Metal Udyog Ltd	5895000	36.3
Lloyds Line Pipes Ltd	20000000	33.25
Total		76.76

 

Clientele:

• Infrastructure: Delhi Metro, Adani Group, Gammon, L&T, Afcons and B L Kashyap.
• Water: Jain Irrigation
• Corporates: Unicer, TATA
• Power & Gas: BHEL, Gujarat Gas, HP, IGL, Moser Baer, Suzlon, BP

 

Management:

• Sanjay Gupta is the CMD

 

 Shareholding Pattern as on March 31, 2016

The Equity Capital is @ Rs 23.44 Crs consisting of 23438636 Equity Shares of FV Rs 10 currently held as under

None of the promoters’ holding is pledged

Sr No	Major Non-Promoter	% Stake
1	IDFC Premier Equity Fund	6.77
2	DSP Blackrock Micro Cap Fund	4.95
3	HDFC Trustee Company Limited – HDFC Prudence	4.97
4	Narendra Kumar Agarwal	2.29
5	Abha Bhanshali	1.14
6	Ashish Kacholia	2.13
7	Sameer Mahendra Sampat	2.38

 

Share Price Trend

 

Consolidated Financial Trend ~ Amt in Rs Crs

Particulars	FY15	FY14	FY13	FY12	FY11	FY10
Equity Paid Up	23.44	23.44*	22.32**	21.3	20.3	20.3
Networth	472	425	368	299	237	191
Total Debt	434	505	445	311	239	157
Net Sales	3014	2569	2008	1392	905	614
PAT	64	59	69	49	43	30
Book Value (Rs)	201	181	157	128	101	81
EPS (Rs)	27.20	25.17	29.44	20.90	18.34	12.8

 

Net Sales grew at a CAGR of 30.37% while PAT grew at a CAGR of 13.46% over the last six years. Net worth has grown at a CAGR of 16.27% over the same period.

• *Note that ~ On August 13, 2013, the Company allotted 1115000 Equity Shares having a FV of Rs 10 each to Mr. Ashok Kumar Gupta, a person considered as promoter upon conversion of equal number of warrants.
• The Company had allotted 1500000 warrants to Mr. Ashok Kumar Gupta on a preferential basis on February 14, 2012 at a price of Rs 145 each wherein each warrant entitled Mr. Ashok Kumar Gupta to subscribe for one Equity Share of the Company.
• Out of these fifteen lakhs warrants, 385000 warrants were converted in to equity shares on March 23, 2013. The Equity share capital thus increased from Rs 22.32 Crs to Rs 23.44 Crs.
• In FY14, the fall in profit margin was due to sluggish demand scenario in the construction and infrastructure sector. Also the Company was not able to pass on the steel price hike fully to consumers in the later part of FY14.