APL Apollo Tubes Q3 Results Review - Despite Weak Volumes, 5 Mtpa Guidance Intact For FY26: IDBI Capital

IDBI Capital Report

APL Apollo Tubes Ltd.'s Q3 FY24 sales were in line with our expectation. Ebitda/tonne remained flat YoY to Rs 4,636 as its volumes remained flat YoY at 604 kt. The new Raipur plant with a capacity of 1.2 millions of tonnes per annum ramp-up is ramping up on expected lines with a capacity utilization of 41% during the quarter.

Also, the company expects the new Raipur plant to potentially contribute revenue of more than Rs 70 billion and Ebitda of Rs 6 billion. During Q3 FY24, the contribution from added products increased to 59% versus 55% in Q2 FY24.

Also, Ebitda of added products was more than Rs 5,000/tonne during the quarter. Broadly, we maintain our FY24-25 forecasts and introduce FY26 estimates in this report.

We now the stock at a price-to-earnings of 30 times FY26 (earlier 35 times FY25E) to derive a target price of Rs 1,775 (earlier Rs 1,577) and upgrade the stock to a 'Buy'.

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