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Buy APL Apollo Tubes; target of Rs 1270: Motilal Oswal

Motilal Oswal is bullish on APL Apollo Tubes recommended buy rating on the stock with a target price of Rs 1270 in its research report dated May 22, 2022.

May 23, 2022 / 12:45 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Motilal Oswal's research report on APL Apollo Tubes


We visited the site of the Guru Teg Bahadur (GTB) Hospital to observe the shifting trends in the Structural Tube industry, driven by the increasing acceptance of steel tubes and its growing consumption in Construction projects. The key drivers of APAT’s performance include: a) growing demand across product segments, b) increased product penetration, with a robust distribution network, c) an increase in the share of VAP, driving margins, d) the introduction of Apollo Mart, and e) its market leadership position.


Outlook


We expect a revenue/EBITDA/PAT CAGR of 25%/25%/34% over FY22-24 and a strong cumulative CFO/FCF generation of INR17.7b/INR9.8b over FY23-24. APLL is expected to turn net cash positive by FY24. We value the stock at 35x FY24E EPS. Our TP of INR1,270 per share. We maintain our Buy rating.


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first published: May 23, 2022 12:43 pm
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