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Is Apl Apollo Tubes a solid growth stock? - The numbers tells it is

06-06-2016 • About Apl Apollo Tubes ($APLAPOLLO) • By InTwits

Apl Apollo Tubes is a growth stock in Iron & Steel Products industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


Apl Apollo Tubes showed growth in the last financial year. The company's revenue surged on 34.3% in FY2016. EBITDA also increased considerably: 56.6% for the same period.

In the last 3 years the company showed fast revenue growth of 28.0% from FY2013 to FY2016 annually. EBITDA surged on 21.9% from FY2013 to FY2016 annually.

Apl Apollo Tubes ($APLAPOLLO) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue13,92320,08324,97031,38342,136
Revenue growth, %44.2%24.3%25.7%34.3%
SG&A, %6.72%6.58%
EBITDA1,1511,5951,6461,8472,893
EBITDA growth, %38.6%3.1%12.2%56.6%
EBITDA margin, %8.27%7.94%6.59%5.88%6.86%
Net Income4916865906381,006
Net Income margin, % 3.52%3.42%2.36%2.03%2.39%
 
CAPEX7798491,2781,8391,256
CAPEX/Revenue, %5.60%4.23%5.12%5.86%2.98%
Debt3,1064,4495,0484,3425,985
Cash2023191810
Net Debt/EBITDA2.7x2.8x3.1x2.3x2.1x
 
ROIC, %18.2%19.5%16.0%16.6%22.7%
ROE, %18.3%20.6%14.9%14.2%19.3%

Profitability and return on investment


EBITDA growth was supported by margin expansion. EBITDA margin surged on 1 pp from 5.90% to 6.90% in FY2016. In the longer period Apl Apollo Tubes showed big decline in EBITDA margin of 1 pp from 7.90% in FY2013 to 6.90% in FY2016.

Apl Apollo Tubes shows attractive ROIC at 22.7% for the last 12 months which assumes stable development model. During the last three years it surged - it was 19.5% in FY2013. For the last three years the average ROIC was 18.4%.

Apl Apollo Tubes's Net Income margin surged on 0.400 pp from 2% to 2.40% in FY2016. In the longer period Net Income margin dropped on 1 pp from 3.40% in FY2013 to 2.40% in FY2016.

Apl Apollo Tubes operates at ROE of 19.3%. Average ROE for the last three years was 16.1%.

Capital expenditures (CAPEX)


Apl Apollo Tubes's CAPEX/Revenue was 2.98% in FY2016. Apl Apollo Tubes's CAPEX/Revenue dropped on 1.25 pp from 4.23% in FY2013 to 2.98% in FY2016. For the last three years the average CAPEX/Revenue was 4.65%.

Leverage (Debt)


Having such a fast growth profile the company keeps medium debt level at 2.1x Net Debt/EBITDA. In the longer period Apl Apollo Tubes's leverage dropped on 0.71x from 2.77x in FY2013 to 2.07x in FY2016.

Valuation vs. comparable companies


At the end of trading day today Apl Apollo Tubes traded at 9.3x EV/EBITDA which is 62.2% lower than 24.5x Iron & Steel Products peer group avearge calculated on the basis of 85 companies. The market closed today at 20.8x P/E for Apl Apollo Tubes which is 44.7% lower than 37.6x Iron & Steel Products peer group avearge calculated on the basis of 8 companies.

Management team


Apl Apollo Tubes is headed by Romi Sehgal as a CEO and by Deepak Goyal as a CFO.

Peers in Iron & Steel Products


Below you can find Apl Apollo Tubes benchmarking vs. other companies in Iron & Steel Products industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Bedmutha Industries ($BEDMUTHA)-7.4%2.7%44.6%52.8%
Vallabh Steels ($VALLABHSQ)-9.7%-15.7%-18.8%15.8%
Electrotherm (India) ($ELECTHERM)11.0%
Nile ($NILE)-19.1%6.9%38.7%10.2%
Usha Martin ($USHAMART)7.8%12.5%12.0%-9.1%
 
Median (9 companies)20.4%-7.4%6.9%7.9%-9.1%
Apl Apollo Tubes ($APLAPOLLO)44.2%24.3%25.7%34.3%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Gandhi Special Tubes ($GANDHITUBE)25.5%
National Fittings ($NATFIT)19.3%
Usha Martin ($USHAMART)13.2%18.1%18.7%16.5%8.5%
Shree Steel Wire Ropes ($SSWRL)12.5%
Lakshmi Precision Screws ($LAKPRE)15.9%16.2%7.0%12.4%
 
Median (14 companies)5.5%6.0%7.0%6.3%4.1%
Apl Apollo Tubes ($APLAPOLLO)8.3%7.9%6.6%5.9%6.9%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Usha Martin ($USHAMART)21.6%23.5%29.0%13.2%9.2%
Gandhi Special Tubes ($GANDHITUBE)4.0%
 
Median (2 companies)6.2%1.6%22.2%8.6%9.2%
Apl Apollo Tubes ($APLAPOLLO)5.6%4.2%5.1%5.9%3.0%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Lakshmi Precision Screws ($LAKPRE)14.4%11.9%3.1%11.9%
Gandhi Special Tubes ($GANDHITUBE)28.3%18.9%13.2%11.1%13.3%
Usha Martin ($USHAMART)4.3%6.5%7.6%5.6%0.7%
Gujarat Containers ($GUJCONT)20.0%
Siddhartha Tubes ($SIDDHATUBE)
 
Median (24 companies)8.5%7.2%5.9%11.1%7.0%
Apl Apollo Tubes ($APLAPOLLO)18.2%19.5%16.0%16.6%22.7%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Usha Martin ($USHAMART)10.0x4.8x4.8x5.2x11.4x
Lakshmi Precision Screws ($LAKPRE)2.7x3.4x8.1x4.4x
Uni Abex Alloy Products ($UNIABEXAL)0.0x1.6x0.0x0.0x
National Fittings ($NATFIT)0.8x0.1x0.0x0.0x0.0x
Remi Edelstahl Tubulars ($REMIEDEL)5.5x4.8x0.0x
 
Median (12 companies)2.6x3.7x0.0x0.0x0.0x
Apl Apollo Tubes ($APLAPOLLO)2.7x2.8x3.1x2.3x2.1x