APLAPOLLO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 2.9

📊 Core Financials

• Revenue & Profitability: PAT declined from 116 Cr. to 106 Cr., showing short-term weakness despite long-term growth (Qtr Profit Var +1,695%).
• Margins: ROE at 10.7% and ROCE at 14.7% indicate moderate efficiency.
• Debt: Debt-to-equity ratio of 0.25 reflects manageable leverage.
• Cash Flow: Dividend yield of 0.32% is low, with reinvestment favored over payouts.

💹 Valuation Indicators

• P/E Ratio: 110 vs Industry PE of 20.6 — extremely overvalued.
• P/B Ratio: Current Price 1,821 ₹ vs Book Value 114 ₹ → ~16x, expensive.
• PEG Ratio: -8.11, highlighting poor earnings growth relative to valuation.
• Intrinsic Value: Current valuation far exceeds fundamentals, suggesting limited upside at present levels.

🏢 Business Model & Competitive Advantage

• APL Apollo is India’s largest structural steel tube manufacturer, serving construction and infrastructure sectors.
• Competitive advantage lies in scale, product diversification, and strong distribution network.
• However, profitability metrics remain modest compared to valuation multiples.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive only near 1,400–1,550 ₹ range, closer to intrinsic fair value and below DMA 200.
• Long-Term Holding: High-risk investment at current valuations; suitable only for aggressive investors betting on sector growth.

✅ Positive

• Strong industry positioning as market leader in structural steel tubes.
• Quarterly profit growth trend over the year (+1,695%).
• Institutional support with rising FII (+0.67%) and DII (+2.09%) holdings.

⚠️ Limitation

• Extremely high P/E (110) and P/B (~16x) make the stock expensive.
• Weak ROE (10.7%) and ROCE (14.7%) compared to valuation multiples.
• Dividend yield (0.32%) is very low.

📉 Company Negative News

• PAT declined sequentially from 116 Cr. to 106 Cr.
• PEG ratio (-8.11) signals poor earnings growth relative to valuation.

📈 Company Positive News

• Strong institutional support with increased FII and DII holdings.
• Stock trading above DMA 50 & DMA 200, showing technical strength.

🌐 Industry

• Industry PE at 20.6, much lower than APL Apollo’s valuation.
• Steel and infrastructure sector benefits from government spending and construction demand.

🔎 Conclusion

• APL Apollo is fundamentally overvalued despite strong industry positioning.
• Low efficiency metrics and high valuation multiples make current entry unattractive.
• Best suited for accumulation near 1,400–1,550 ₹ levels.
• Long-term holding viable only if earnings growth improves significantly to justify premium valuations.