Buy Apollo Pipes; target of Rs 600: YES Securities

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26 Aug, 2025 12:21

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Apollo Pipes Ltd (APOLP), reported highest ever quarterly volumes of 18,011 (Te), a growth of 44%YoY (on low base) & stellar 16.5%QoQ growth. Volume growth was driven by strong demand from plumbing segment backed by healthy demand from agriculture segment. Amidst the falling PVC prices in Oct‐Nov’22, company largely maintained its ASP on sequential basis at Rs131/Kg (Vs Rs152/Kg in Q3FY22), owing to higher contribution from value‐added products. However, EBITDA margins were under pressure on account of higher other expenses as %sales which came in at 11.5% in Q3FY23 Vs 9.9% in Q3FY22. Company reiterated their 3‐year vision to grow revenue by more than 30%‐35% CAGR. In order to cater the growing demand, APOLP will expand their capacities in North & set‐up new lines for value‐added products and increase their footprints in domestic markets. The focus on increasing the contribution of value‐added products will enable the company to improve their profitability. Additionally, company is expanding their product portfolio to 2,500+ units from current 1,500+. We continue to remain positive on APOLP and expect company’s Volume/Revenue/EBITDA/PAT to grow by 20%/22%/19%/30% respectively over FY22‐FY24E. We reckon, company will continue to massively outperform industry growth by expanding marketshare in West and South along with strengthening their dominant position in North. Moreover, with worst of PVC impact behind & higher contribution from value‐added products, we expect EBITDA/ Kg to come in at Rs17 by FY24E.

Hence, we continue to value the company at P/E(x) of 28x on FY24E EPS of Rs21.4 & maintain our BUY rating on the stock with a target price of Rs600.

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