Buy APL Apollo Tubes; target of Rs 2260: Motilal Oswal

Buy

Motilal Oswal's research report on APL Apollo Tubes

APL Apollo Tubes (APAT) is India's undisputed market leader in structural steel tubes with a 55% market share and 4.5 MTPA capacity spread across 11 manufacturing facilities. It has delivered consistent volume growth in the last eight quarters, with sales rising to a record ~917KT in 3QFY26 (+11% YoY). In 3Q, HRC prices have declined by 4% QoQ and 8% vs. 1Q, though they have increased 8% in the last 20 days after the imposition of safeguard duty on steel imports. HRC price drop in 3Q could lead to inventory losses, and consequently, we have projected EBITDA/MT of INR5,000 for 3Q vs. INR5,228 in 2Q. Despite persistent softness in the industry, APAT registered 11% YoY volume growth in 9MFY26 and maintains FY26 volume growth guidance of 10-15%, supported by capacity expansion in the high-growth region (Dubai), new strategy of launching a sub-premium brand ‘SG Premium’ and healthy private-sector demand across infrastructure, solar, and manufacturing.

Outlook

We expect APAT to report a CAGR of 14%/29%/33% in revenue/EBITDA/PAT over FY25-28. We value the stock at 35x FY27E EPS to arrive at our TP of INR2,260. Reiterate BUY.

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APL Apollo Tubes - 09012026 -moti