Buy APL Apollo Tubes; target of Rs 1750: Motilal Oswal

Motilal Oswal is bullish on APL Apollo Tubes has recommended buy rating on the stock with a target price of Rs 1750 in its research report dated October 29, 2024.

Broker Research

October 31, 2024 / 12:31 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on APL Apollo Tubes

APL Apollo Tubes (APAT) reported the fourth consecutive quarter of weak operating performance (EBITDA/MT down 62% YoY in 2Q) on account of inventory loss of ~INR1.5b (led by a fall in steel prices) and higher discounting during the quarter. Revenues grew marginally at 3% YoY led by volume growth (up 12% YoY), which was partially offset by a decline in realizations (down 8% YoY). With higher inventory loss being booked in 2Q, we see a lower possibility of any major inventory loss in 2H. Additionally, the company will benefit from the improving VAP mix and favorable operating leverage, resulting in a sequential recovery in margins. We cut our FY25E/FY26E earnings by 10%/6%, primarily due to lower EBITDA/MT (reduced by 9%/5% for FY25E/26E). We value the stock at 35x Sep’26E EPS to arrive at a TP of INR1,750. Reiterate BUY.

Outlook

We expect APAT to clock a CAGR of 20%/22%/28% in revenue/EBITDA/PAT over FY24-27. We value the stock at 35x Sep’26E EPS to arrive at a TP of INR1,750. Reiterate BUY.

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