The New Year has definitely begun on a great note for the promoters of Apollo Pipes, a leading PVC pipe manufacturer. In fact, 2017 was not bad either with the stock doubling from Rs.300 to Rs.600. As 2017 was fading out, managing director Sameer Gupta sold 1.76 million shares to bank Rs.98.2 crore and the rest of the promoter family also followed in early 2018 selling equity worth Rs.127.3 crore. Essentially, of the current market cap of Rs.740 crore, about Rs.225 crore of promoter holding moved to private investors in a bulk deal.
This stake was picked up by a host of institutional investors. The notable ones were – FIL Investments which bought 9.3%, Param Value Investment 7.99%, Kotak Mahindra MF 5.5%, India Acorn Fund 3.3%, White Oak India Equity Fund 2.9%, Param Capital 1.99%, and Ajay Relan bought 0.99%. Marquee investment banker Vallabh Bhanshali & family also bought 187,458 shares at Rs.554. While the stock did hit an all-time high of 725 recently, Emkay Global has a 12-month price target of Rs.1,000.
Relan also has a 0.5% stake in the Sudesh Kumar Gupta-founded APL Apollo Tubes, which manufactures and exports steel tubes and with which Apollo Pipes has ties. Not so long ago Apollo Pipes was known as Amulya Leasing & Finance (AMLF). The Emkay Global report states, “AMLF was not carrying out any business, but was acting as a holding company of Apollo Pipes (pre-merged), with 50.96% shareholding. The management then decided to bring in 100% of Apollo Pipes (pre-merged) in the listed entity through the reverse merger route, and rename it to Apollo Pipes.”
Rising spend in irrigation and housing are expected to bring in the next wave of growth. Analysts are banking on newer applications and the ambitious capacity expansion plan (to 100,000 MTPA by FY19), along with its regional expansion in Western India. Sales & profit over the past five years have compounded at 19% and 41% respectively driven by introduction of value-added products, and its ability to leverage the strong distribution network of APL Apollo Tubes.