Buy APL Apollo Tubes; target of Rs 1800: Motilal Oswal

Motilal Oswal's research report on APL Apollo Tubes

APL Apollo Tubes (APAT) reported muted sales volume of 679KMT (up 4% YoY and 12% QoQ) in 4QFY24, led by channel de-stocking due to steel price corrections. Further, EBITDA/MT declined ~17% YoY to ~INR4,132, due to higher rebates and discounts offered by APAT to counter the inventory destocking.

Outlook

We cut our FY25E earnings by 8% due to lower EBITDA/MT (reduced by 4%), while largely maintaining our earnings for FY26E. We value the stock at 32x FY26E EPS to arrive at a TP of INR1,800. Reiterate BUY.