Buy APL Apollo Tubes; target of Rs 1850: Sharekhan

Sharekhan's research report on APL Apollo Tubes

Consolidated revenues stayed in line aided by 9% y-o-y volume growth for Q1FY2025. EBITDA/tonne lagged estimates, affected by a one-off rise in employee and other costs. PAT stays in-line. Management targets 3.2 million sales volumes in FY2025 expecting H2 to be strong and retained 20-25% y-o-y growth guidance for FY2026. Its capacity target of 5 million tonnes in 12-15 months remain unchanged from current 4.5 million tonnes. Ramp up in newly commissioned plants is expected to help achieve Rs. 5000 EBITDA/tonne by FY2027 on conservative basis.

Outlook

We maintain a Buy on the stock with an unchanged PT of Rs. 1850, rolling forward our valuation to H1FY2027E earnings which offset downward revision in estimates.