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
Revenue	13,923	20,083	24,970	31,383	42,136
Revenue growth, %		44.2%	24.3%	25.7%	34.3%
SG&A, %	6.72%	6.58%
EBITDA	1,151	1,595	1,646	1,847	2,893
EBITDA growth, %		38.6%	3.1%	12.2%	56.6%
EBITDA margin, %	8.27%	7.94%	6.59%	5.88%	6.86%
Net Income	491	686	590	638	1,006
Net Income margin, %	3.52%	3.42%	2.36%	2.03%	2.39%

CAPEX	779	849	1,278	1,839	1,256
CAPEX/Revenue, %	5.60%	4.23%	5.12%	5.86%	2.98%
Debt	3,106	4,449	5,048	4,342	5,985
Cash	20	23	19	18	10
Net Debt/EBITDA	2.7x	2.8x	3.1x	2.3x	2.1x

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, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
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, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
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, %

Top
	FY2012	FY2013	FY2014	FY2015	FY2016
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, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
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

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Usha Martin ($USHAMART)	10.0x	4.8x	4.8x	5.2x	11.4x
Lakshmi Precision Screws ($LAKPRE)	2.7x	3.4x	8.1x	4.4x
Uni Abex Alloy Products ($UNIABEXAL)	0.0x	1.6x	0.0x	0.0x
National Fittings ($NATFIT)	0.8x	0.1x	0.0x	0.0x	0.0x
Remi Edelstahl Tubulars ($REMIEDEL)	5.5x	4.8x		0.0x

Median (12 companies)	2.6x	3.7x	0.0x	0.0x	0.0x
Apl Apollo Tubes ($APLAPOLLO)	2.7x	2.8x	3.1x	2.3x	2.1x

Apl Apollo Tubes stock price chart

Apl Apollo Tubes financials

mln.	FY2010	FY2011	FY2012

Revenue	38,124	9,010	13,923
EBITDA	600.6	956.6	1,151
Net income	297.8	430.9	490.6
CAPEX	559.1	790.5	779.0
Debt	1,573	2,473	3,106
Cash	30.773	43.280	20.220

About Apl Apollo Tubes

APL Apollo Tubes Limited manufactures and sells steel tubes and pipes in India. It offers MS black round tubes for liquid transmission, idlers, mechanical and engineering, structural, water and sewage, water well, fire protection, fencing, and other applications; galvanized iron tubes that are used in underground piping, overground piping, power, refineries, scaffolding, engineering structurals, scientific experiments, and fire-fighting systems; and pre-galvanized tubes for applications in fencing, cabling, ducting, automotive, and greenhouse structures. The company also provides hollow sections that are used in construction, machinery, automotive, furniture, storage system, and transmission tower applications; and API tubes, such as plain-end, threaded-end, and belled-end pipes, as well as through-the-flow line pipes for use in conveying gas, water, and oil and natural gas industries. In addition, it offers dynamically balanced tubes for use in engineering sector; idler tubes for conveyors; and propeller shafts and bobbin tubes for use in textile industry. The company also exports its products to approximately 35 countries. The company was formerly known as Bihar Tubes Limited and changed its name to APL Apollo Tubes Limited in 2010. APL Apollo Tubes Limited was founded in 1986 and is based in Ghaziabad, India.