APLAPOLLO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.8
| Stock Code | APLAPOLLO | Market Cap | 60,400 Cr. | Current Price | 2,175 ₹ | High / Low | 2,196 ₹ |
| Stock P/E | 123 | Book Value | 114 ₹ | Dividend Yield | 0.26 % | ROCE | 14.7 % |
| ROE | 10.7 % | Face Value | 2.00 ₹ | DMA 50 | 1,917 ₹ | DMA 200 | 1,759 ₹ |
| Chg in FII Hold | -0.60 % | Chg in DII Hold | 0.99 % | PAT Qtr | 120 Cr. | PAT Prev Qtr | 106 Cr. |
| RSI | 75.8 | MACD | 68.5 | Volume | 11,57,887 | Avg Vol 1Wk | 10,58,128 |
| Low price | 1,273 ₹ | High price | 2,196 ₹ | PEG Ratio | -9.03 | Debt to equity | 0.25 |
| 52w Index | 97.7 % | Qtr Profit Var | 38.7 % | EPS | 17.8 ₹ | Industry PE | 19.5 |
📊 APL Apollo is trading at very high valuations (P/E 123 vs industry 19.5), which makes it expensive relative to peers. The fundamentals show moderate efficiency with ROCE (14.7%) and ROE (10.7%), but not strong enough to justify such steep multiples. Dividend yield is low at 0.26%, and the PEG ratio is negative (-9.03), indicating poor earnings growth relative to price. While quarterly profit growth is healthy (+38.7%), EPS remains modest (17.8 ₹). Technical indicators show overbought momentum (RSI 75.8, MACD positive), suggesting limited upside in the near term.
💡 Ideal Entry Price Zone: 1,600 ₹ – 1,800 ₹, closer to 200 DMA support and valuation comfort. Current price (2,175 ₹) is stretched relative to fundamentals.
📌 Exit Strategy / Holding Period: If already holding, consider partial exit near 2,200 ₹ resistance levels. Long-term investors should only hold if expecting structural growth in steel demand and margin expansion. Otherwise, reallocate capital to peers with better valuation comfort. Holding period should be limited until ROE/ROCE improve significantly.
Positive
- Strong market capitalization (60,400 Cr.) ensures liquidity.
- Quarterly PAT growth of 38.7% shows earnings momentum.
- DII holdings increased (+0.99%), reflecting domestic institutional support.
- Stock trading well above 200 DMA indicates strong medium-term trend.
Limitation
- Extremely high P/E ratio (123) compared to industry average (19.5).
- Negative PEG ratio (-9.03) highlights poor earnings growth relative to price.
- Dividend yield is very low at 0.26%.
- RSI at 75.8 suggests overbought conditions.
Company Negative News
- FII holdings decreased (-0.60%), showing reduced foreign investor confidence.
- Valuation concerns due to steep multiples.
Company Positive News
- Quarterly PAT improved from 106 Cr. to 120 Cr.
- DII holdings increased (+0.99%), indicating domestic support.
- Strong trading volumes above average suggest investor interest.
Industry
- Industry P/E is 19.5, highlighting APL Apollo’s steep premium valuation.
- Steel and structural products sector has long-term demand potential driven by infrastructure growth in India.
Conclusion
⚠️ APL Apollo is currently overvalued with modest profitability metrics. It is not an ideal candidate for long-term investment at current levels. Entry should be considered only around 1,600–1,800 ₹ for valuation comfort. Existing holders may exit near 2,200 ₹ resistance unless ROE/ROCE improve significantly and earnings growth becomes more sustainable.