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IDBI Capital Report
We visited APL Apollo Tubes Ltd.'s newly set-up 1.2 million tonnes per annum (saleable capacity) Raipur plant and interacted with its management.
The plant is set up with focus on value added products that can produce pipes with dimension that range from 8x8x0.18 mm to 1000x1000x40 mm- unmatched by any other plant in India.
The Raipur complex is divided into three complexes, namely, hollow pipes, narrow pipes and wider pipes. The hollow section produces heavy and super heavy products with capacity of 500 kilo tonne. The narrow section is mainly focused on tubes and flat with capacity of 480 kt. Wider section also focuses on other flat products and has a capacity of 240 kt.
The Raipur complex has surplus land which can be utilized for further brownfield expansions post FY25.
Outlook:
APL Apollo reiterated that it targets sales volumes at 5 mtpa by FY26 of which 70% will be from value added products.
We now value the stock at a price-to-earning ratio of 35 times (Earlier 33 times) FY25 earnings per share to derive a target price of Rs 1,584 (earlier Rs 1,494) and continue to maintain 'Hold' rating.
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