Target: ₹960

CMP: ₹849.55

APL Apollo Ltd Q3-FY22 consolidated revenues came in at ₹3,230 crore, up 24.2 per cent y-o-y and up 4.7 per cent q-o-q. Operational profit for Q3-FY22 stood at ₹202 crore, down 13 per cent y-o-y -9 per cent q-o-q.

PAT for Q3-FY22 stood at ₹116 crore, down 12 per cent y-o-y and down by 11.5 per cent q-o-q.

The company lost almost 1,00,000 tonne sales volume.

Management stated 3 reasons for the decline in q-o-q volume sales: Channel de-stocking in anticipation of steel price correction; extended monsoon which impacted the construction activity; increase in price gap between primary and secondary steel which benefited the unorganised sector.

The company has launched Apollo mart a wholly owned subsidiary. It is a tech enabled trading platform for steel building material.

Company has already spent 50 per cent of the total budgeted capex of Rs 800 cr in establishing Raipur facility. Management is firm in maintaining their single digit receivable days and will strictly follow cash and carry model.

APL Apollo delivered average numbers in Q3-FY22. The volatility in steel prices is a major risk but we believe company will deliver good performance in the coming few quarters. The merger of APL and Apollo tricoat is completed but the merged entity shares are expected to trade from Q1FY23.

Union budget 22-23 also focuses on improving infrastructure which can reap benefits for the company.