Buy APL Apollo Tubes, target Rs 1195 : Systematix Shares & Stock

Systematix Shares & Stock has a buy call on APL Apollo Tubes Ltd. with a target price of Rs 1195 .The current market price of APL Apollo Tubes Ltd. is Rs 930 Time period given by the brokerage is year when APL Apollo Tubes Ltd. price can reach defined target. APL Apollo Tubes’s revenue from manufacturing activities stood flat yoy at Rs8,989mn, while sales from trading activities dropped sharply by 71% yoy to Rs566mn. Total sales were 12% below estimates, mainly due to lower revenue from trading activities. Overall volume grew by 9% yoy to 246,000tn. We expect the company’s total revenue and net profit to grow by 8.4% and 28.3% respectively over FY16-18e, with healthy return ratios and positive FCF. We believe the stock deserves a premium valuation of 9x EV/EBITDA on FY18e basis.