APL Apollo Tubes hits new high; stock zooms 128% in calendar year 2020

CARE Ratings revised the long-term ratings assigned to the bank facilities of APL Apollo Tubes with a stable outlook
Shares of APL Apollo Tubes rose 2 per cent to hit a new high of Rs 853 on the BSE in Thursday's early trade. The stock has gained 4 per cent in the past two days after CARE Ratings revised the long-term ratings assigned to the bank facilities of the company with a stable outlook.

The stock was trading higher for the seventh straight day and has rallied 18 per cent during the period. During the calendar year 2020, it has logged 128 per cent gains, as compared to a 16-per cent rise in the S&P BSE Sensex.

The rating agency said the revision in rating factors is on the improvement in the operating performance characterised by steady growth in the sales volume – including successful operationalisation of the recently acquired Apollo Tricoat facility – and healthy PBILDT (profit before interest, lease, depreciation and tax) per-tonne.

APL has a strong pan India distribution network and it has been increasing its market share in the structural tubes segment leading to cost efficiencies which coupled with an increasing contribution from value-added products has resulted in strong growth in profits and cash accruals, it said.

Further, notwithstanding the persistence of the Covid-19 pandemic, the company reported strong consolidated PBILDT per tonne of Rs 3,528 during H1FY21 (H1FY20: Rs. 2738 per tonne) and sales volume of 7.19 lakh MT on back of recovery of demand in Q2FY21 and the company’s established ability to continue gaining market share from smaller players due to its cost efficiencies, a wide product portfolio and strong marketing network. The company reported healthy cash accruals of Rs 177.31 crores during H1FY21 (H1FY20: Rs. 127.82 crore), the rating agency said.

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