Motilal Oswal's research report on APL Apollo Tubes
APL Apollo Tubes (APAT) reported healthy sales volume of 721kmt (up 9% YoY/6% QoQ) in 1QFY25, led by the ramp-up of its Raipur and Dubai plants. However, EBITDA/MT fell ~10% YoY to ~INR4,183, due to high operational expenses (high employee, freight, power cost and ad spending in 1Q). We cut our FY25E/FY26E earnings by 13%/12%, primarily due to lower EBITDA/MT (reduced by 8% for both years). We value the stock at 35x FY26E EPS to arrive at a TP of INR1,720. Reiterate BUY.
Outlook
We expect a CAGR of 23%/28%/36% in revenue/EBITDA/PAT over FY24-26. We cut our FY25E/FY26E earnings by 13%/12% primarily due to lower EBITDA/MT (reduced by 8% for both years). We value the stock at 35x FY26E EPS to arrive at a TP of INR1,720. Reiterate BUY.
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