APL Apollo Tubes Shares Downgraded To 'Add' By Yes Securities Post Q1 Results — Check Target Price

FY26 is expected to begin on a challenging note due to a subdued macroeconomic environment and continued weakness in retail demand. However, we anticipate a gradual improvement from H2 FY26, driven by a potential revival in government infrastructure spending and a recovery in retail consumption, which has remained muted for several quarters.

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Yes Securities Report

Analyst view and Investment Thesis

1-year View:

FY26 is expected to begin on a challenging note due to a subdued macroeconomic environment and continued weakness in retail demand. However, we anticipate a gradual improvement from H2 FY26, driven by a potential revival in government infrastructure spending and a recovery in retail consumption, which has remained muted for several quarters.

With significant volatility in hot rolled coil prices now largely behind us and indications of prices having bottomed out, we expect a steady improvement in APL’s pricing environment. This should be further supported by a rising contribution from value-added products, enhancing overall margin resilience.

We project 8% volume growth for FY26E, with an estimated Ebitda per ton (Ebitda/tonne) of Rs 4,800, reflecting improved operating leverage and a favorable product mix.

Three-years View:

Looking ahead, we believe APL’s growth trajectory is poised to strengthen FY27 onwards, supported by an expected pick-up in government-led infrastructure projects. Additionally, the favorable base effect of FY26 positions the company well to deliver volume growth of 15–20% over the coming years.

To cater to this anticipated demand, APL is undertaking a significant capacity expansion—from 4.5 million Te to 6.8 millio Te by FY28. The company is also focusing on increasing its presence in export markets, which will further accelerate growth and improve diversification.

Given the muted performance expected in H1 FY26, we have revised our FY26E volume growth estimate downwards to 8%YoY, while maintaining 15% growth for FY27E.

We remain confident in APL’s ability to deliver healthy margins, with Ebitda/tonne estimated at Rs 4,800 in FY26E and Rs 4,900 in FY27E, supported by an increasing share of value-added products and improved operating leverage.

At the current market price, the stock is trading at a P/E of 34x on FY27E EPS of Rs 49.5 (revised down by 7%).

We continue to value the company at 40x FY27E EPS, arriving at a target price of Rs 1,981. Hence, we downgrade the stock from a Buy to an Add rating.

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