APL Apollo: Earnings Beat On Superior Margins In Q2 Says Systematix Maintaining 'Hold'— Check New Target Price

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Systematix Report

We alter our FY26E/FY27E Ebitda estimates of APL Apollo Tubes Ltd. by +3%/+7% based on moderately higher Ebitea/tonne assumption and introduce FY28 estimates assuming 12% YoY growth and Rs 5,000/t Ebitda.

We expect adjusted profit after tax to deliver 13%/24%/23% revenue/Ebitda/PAT CAGR over FY25-FY28E.

The management reiterated its primary focus on margin expansion as it simultaneously targets volume growth through-

1. improving utilisation rates enabling operating leverage, and

2. aggressive pricing strategies in a smaller general structures segment (SG premium) to compete in the Patra pipe segment, and

3. selling other general structures at a premium, leveraging its market share.

The Ebitda/t growth outlook is solidified by this quarter’s performance, witnessing a steep drop in HRC prices, which have likely bottomed out and have safeguard duties in place to prevent further decline.

We value APAT 25x H1 FY28E EV/Ebitda with a revised target price of Rs 1,959/share (Rs 1,718/share earlier). Maintain Hold.

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