Shareholder of Apollo Steel Tubes Ltd have had quite an emotional journey in the past year. Their stock, which was initially priced at Rs. 60 in November 2015 skyrocketed to unprecedented heights of Rs. 113 by April 2016. However, the stock encountered a sharp drop in the months that followed. As of November 2016, the price has fallen to below Rs. 60 and, since then, it has been on an upsurge, currently trading at Rs. 84.
In India, this company is one of the most reputable manufacturers of steel tubes that are precision-made. Two production units ,located in the states of Gujarat and Orissa, put together a remarkable assortment of steel pipes; ERW-black, galvanized, square/rectangular shaped hollow pipes and distinctive specialty tubes.
Boasting a 15% dominance of the domestic market, ASTEEL has built a formidable reputation of providing products to an international arena of over 30 countries.
During the past five years, an impressive 10% compound annual growth rate (CAGR) in revenue and even higher 15% CAGR for profit have seen the company surge forward. The motor industry and general engineering sectors have been at the helm of this acceleration with their burgeoning demand.
In the preceding twelve months, the cost of acquiring ASTEEL stock has been unsteady due to worries about China’s economic situation and the way in which demonetisation affected the firm’s operations. Nevertheless, we are adamant that ASTEEL’s extended prosperity is still unharmed.
Despite being priced at Rs. 84, it is our opinion that the firm’s stock is fairly valued as their FY2017 earnings are reflected in a PE multiple of 12x. Therefore, we recommend ‘holding’ onto the shares.
Post time: 2023-07-01