Apollo Pipes Ltd (APL) is a top leading PVC pipe manufacturers in India. The stock has rallied more than 136% in a year’s period, giving multibagger return. Domestic brokerage house Yes Securities sees further upside on the stock. Plastic pipe industry is witnessing material shift in demand from unorganized to organized. This should result into outperformance by organized players in coming years, as per the brokerage.
“Apollo Pipes is expected to gain market share from regional unorganized players in newer geographies with deepening their presence in north, hence we reckon Apollo pipes will not only outperform industry growth but will be one of the fastest growing pipe company by reporting 28% volume growth over FY21-FY24E,” the note added.
Sharing the stock as its top pick for 2022, Yes Securities’ Buy tag comes with a target price of ₹1,070, implying a potential return of over 85% from current levels.
APL has historically traded at a steep discount as compared to its peers as the company was regarded as a ‘Regional player’. However with APL gaining ground across nation coupled with higher margin products viz CPVC, Fittings contribution likely to expand- Yes Securities reckons APL should fetch similar valuations as other peers.
Plastic pipe industry is largely driven by irrigation followed by Plumbing & WSS demand. On the back of GoI’s initiatives like Jal Jeevan Mission which is likely to witness sharp increase in budgetary spends, coupled with higher agri spends should enable the Plastic Pipe industry to grow by 15% over FY20-FY25E.
Yes Securities top stock picks for 2022 also include CCL products (target price: ₹500), CRISIL (TP: ₹3,750), ICICI Pru (TP: ₹836), IGL (TP: ₹620), Prestige (TP: ₹621), Reliance (TP: ₹2,860), VMart (TP: ₹4,516), SunTeck (TP: ₹619).
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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