Recent Price Movement and Market Context
On 02-Jan, Apollo Pipes Ltd’s shares declined by ₹5.6, marking a 1.9% drop from the previous close. This decline follows two consecutive days of gains, signalling a trend reversal. The stock is trading close to its 52-week low, just 4.05% above the lowest price of ₹277.15, underscoring persistent weakness. Furthermore, the stock underperformed its sector by nearly 3% on the day, reflecting broader challenges within its industry segment.
Technical indicators also paint a bearish picture. Apollo Pipes is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, suggesting sustained downward momentum. Additionally, delivery volumes have dropped sharply, with the volume on 01 Jan falling by 38.87% compared to the five-day average, indicating waning investor interest and participation.
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Long-Term Underperformance and Financial Weakness
Apollo Pipes has significantly underperformed the broader market over multiple time horizons. Over the past year, the stock has declined by 37.46%, while the Sensex gained 7.28%. The three-year performance is even more stark, with the stock falling 43.45% compared to a 40.21% rise in the Sensex. Although the five-year return remains positive at 21.94%, it lags considerably behind the Sensex’s 79.16% gain, highlighting persistent challenges in growth and profitability.
Financially, the company’s operating profit has contracted at an annualised rate of 22.5% over the last five years, signalling poor long-term growth prospects. The latest quarterly results for September 2025 further exacerbate concerns, with profit before tax (PBT) excluding other income plunging by 116.8% to a loss of ₹1.24 crore, and net profit after tax (PAT) falling 77.1% to ₹1.62 crore compared to the previous four-quarter average. Return on capital employed (ROCE) is at a low 4.8%, while return on equity (ROE) stands at 4%, indicating subpar utilisation of shareholder funds.
Despite these weak fundamentals, the stock trades at a price-to-book value of 1.6, which is relatively expensive given the company’s earnings performance. Although it is trading at a discount to its peers’ historical valuations, the valuation does not appear justified in light of deteriorating profitability and growth metrics.
Investor Sentiment and Institutional Participation
Investor confidence in Apollo Pipes appears to be waning, as evidenced by declining institutional participation. Institutional investors have reduced their stake by 1.24% over the previous quarter, now collectively holding 18.3% of the company. Given their superior analytical capabilities and resources, this reduction signals a cautious or negative outlook on the company’s prospects. The falling delivery volumes and underperformance relative to the BSE500 index over the last three years, one year, and three months further reinforce the subdued sentiment among market participants.
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Debt Servicing Strength Amidst Challenges
One positive aspect for Apollo Pipes is its strong ability to service debt, reflected in a low Debt to EBITDA ratio of 1.31 times. This suggests that despite operational and profitability challenges, the company maintains a manageable debt burden, which could provide some cushion against financial distress. However, this strength has not been sufficient to offset the negative market sentiment and weak earnings performance that continue to weigh on the stock price.
Conclusion
In summary, Apollo Pipes Ltd’s share price decline on 02-Jan is driven by a combination of poor financial results, long-term underperformance relative to market benchmarks, declining investor participation, and technical weakness. While the company’s debt servicing capacity remains sound, the persistent contraction in operating profits, disappointing quarterly earnings, and reduced institutional interest have contributed to the stock’s downward trajectory. Investors should weigh these factors carefully when considering exposure to Apollo Pipes, especially given its recent trend reversal and proximity to 52-week lows.
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