Buy APL Apollo Tubes: SP Tulsian

Buy APL Apollo Tubes with a price target of about Rs 225 in six months, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "APL Apollo Tubes is a very interesting company. They have five plants. They are making mild steel, black galvanized tubes and hollow sections plus cater largely to airports, metro, infrastructure. In fact, they are into so-called decorative kind of products used in the mild steel space where the cost is quite low and the usages are quite high. In fact, the usages are building up a lot."
He further added, "The nine months performance for the company has surpassed the whole of FY12 performance on all the fronts, on the topline, on the operating profit level as well as on the bottomline. Topline for nine months has been at Rs 1,450 crore, while for FY12 the topline was Rs 1,400 crore. The operating profit for nine months was at Rs 109 crore, while it was at Rs 106 crore for whole of FY12. The PAT has been at Rs 52 crore, while it was at Rs 49 crore for whole of FY12."
"Company posted an EPS of Rs 24 for first nine months against Rs 23 for whole of FY12. The profitability posted by the company is equal exactly. Practically broken in all three quarters equally with maybe gradual increase of about 1 percent, so Rs 32 EPS against Rs 23 EPS having posted by the company for last financial year i.e. FY12 augurs well for the stock."
"Going by their plant locations, they are scattered all over India. Two plants are in northern India, one in the western part of the country, one in the southern part of the country, so it is very easy for them to cater to practically PAN India for all the projects because we all know that the airports, metro and all the projects are coming up all over."
"Share is ruling at a P/E multiple of Rs 6. I expect the EPS of close to about Rs 38-40 for FY14, which makes the stock an interesting buy with a price target of about Rs 225 in six months or so." Disclosure: I have no holdings or interest in the stock discussed.