Buy APL Apollo Tubes; target of Rs 1850: Sharekhan

Sharekhan's research report on APL Apollo Tubes

Consolidated revenues beat estimates, driven by strong volume growth. EBITDA/tonne surged rose sharply, supported by higher realisation in Q3FY2025 compared to Q2FY2025. Operating and net profits were higher than estimates. Management may surpass its 3.2 million tonnes sales volumes guidance for FY2025 driven by a shift in market share from sponge iron steel pipes to HR-coiled steel pipes. EBITDA/tonne expected to reach Rs. 4,500 by Q4 2025. Its capacity target of 5.5 million tonnes by FY2026 stay on track with 6.1 LTPA greenfield expansions and 0.9 LTPA brownfield expansions.

Outlook

We maintain a Buy on the stock with an unchanged PT of Rs. 1850, considering its strong outlook led by capacity additions and structural demand drivers.

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