Rs 136 to Rs 1,620: This stock gave multibagger returns in 5 years but rally faces two risks 

Shares of APL Apollo Tubes Ltd have gained 1,090% in five years. APL Apollo Tubes stock, which closed at Rs 136 on October 1, 2019 stood at Rs 1620 in the previous session on Tuesday. The multibagger stock ended 2.26% higher at Rs 1619.80 on October 1 against the  previous close of Rs 1584 on BSE. At the current level, the stock has gained 24% from its 52 week low of Rs 1306 hit on February 14, 2024. It rose to an all-time high of Rs 1789 on October 18, last year.

The iron and steel stock has delivered over 5581% returns in the last ten years. APL Apollo Tubes stock has gained 6.18% this year but fallen 0.19% in a year.

A total of 0.33 lakh shares of the firm changed hands, amounting to a turnover of Rs 5.24 crore on  BSE. The market cap of the company rose to Rs 44,953 crore on BSE. APL Apollo Tubes stock has a one-year beta of 0.7, indicating very low volatility during the period.

In terms of technicals, the relative strength index (RSI) of APL Apollo Tubes stands at 74.5, signaling it's trading in the overbought zone.

APL Apollo Tubes stock is trading higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day and 200 day moving averages.

Brokerage Nuvama has a price target of Rs 1879 on the stock.

"Although strong volumes are structural in nature, inventory losses, lower share of VAP and reduced premium compel us to cut FY25E/26E/27E EPS by 16%/6%/6%; maintain ‘BUY’ with revised target price of Rs 1,879 (earlier Rs 1,876) as we roll forward 36x PE to Q2FY27 EPS," said the brokerage.

The brokerage cited two key risks for its assumptions.

Slowdown in economy or steel sector

Any slowdown in GDP growth may affect user industries (construction, auto, real estate), which in turn would impact demand for steel pipes. This may hamper the pace of APAT’s growth.

Fluctuations in steel prices

HR coil is the key raw material for manufacturing pipes. Any surge in its prices may hurt APAT’s margins as it may not be able to pass on the increase completely. Similarly, a sharp dip in steel prices could lead to inventory

APL Apollo Tubes Limited is the largest producer of structural steel tubes in India. It has an extended distribution network of warehouses and branch offices in 29 cities across the country catering to domestic as well as 20 countries worldwide. The Delhi-based firm offers over 1,100 varieties of Pre- Galvanized Tubes, Structural Steel Tubes, Galvanized Tubes, MS Black Pipes and Hollow Sections, making APL Apollo is one of leading branded steel products manufacturers in India.