'Buy' APL Apollo Tubes To Get An Upside Of 24%, Says Motilal Oswal — Here's Why

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Motilal Oswal Report

APL Apollo Tubes Ltd. is likely to witness margin improvements as demand recovers after infrastructure spending resumes and dealers begin restocking inventory (affordability factor).

In the long term, we believe APL Apollo would sustain its earnings momentum on the back of:

1. growing demand across segments,

2. increased product penetration with a robust distribution network,

3. rapid capacity expansion (Dubai and eastern markets),

4. an increase in the share of value-added-product, thus driving margins, and

5. its market leadership.

We expect APL to report a compound annual growth rate of 19%/23%/28% in revenue/Ebitda/PAT over FY24-27. We value the stock at 33 times FY27E EPS to arrive at our target price of Rs 1,830. Reiterate Buy.

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