Buy APL Apollo Tubes; target of Rs 1768: Geojit Financial Services

Geojit Financial Services is bullish on APL Apollo Tubes has recommended buy rating on the stock with a target price of Rs 1768 in its research report dated January 30, 2025.

Broker Research

January 30, 2025 / 13:20 IST

Buy

Geojit Financial Services research report on APL Apollo Tubes

APL Apollo Tubes (APAT) is a leading manufacturer of structural steel tubes with an annual production capacity of 4.3mn ton. It has a distribution network spanning 29 cities in India and 20 countries globally. In Q3FY25, Its sales mix comprises Apollo structural tubes (~71%), Apollo Z (~26%), and Apollo Galv (~4%), catering to a diverse range of customers and applications. In Q3FY25, APAT reported a revenue of Rs. 5,433cr, a significant 30.0% YoY growth, driven by increased sales volume. In Q3FY25, sales volume rose 37.1% YoY to 828,000 ton, mainly driven by strong growth in general (+44.6% YoY, 43.4% of sales) and light steel (+50.5% YoY, 17.2% of sales) segments, despite a challenging macro environment and weak retail demand. EBITDA grew 23.6% YoY to Rs. 346cr in Q3FY25 supported by higher revenue and operating leverage from a ramp up in capacity, while margins contracted 30bps YoY to 6.4% due to decline in realization. Reported profit after tax increased 31.1% YoY to Rs. 217cr, driven by improved operating performance and a 44.1% YoY rise in other income.

Outlook

Therefore, we are optimistic about the company’s growth prospects and assign BUY rating on the stock, based on 31x P/E on FY27E adjusted earnings per share (EPS), with a target price of Rs. 1,768.

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