Apollo Pipes - Focus On Volumes Over Margins: Systematix

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.We hosted the management of Apollo Pipes Ltd. in our investor conference. They sounded confident to outgrow industry volume growth with expansion in distribution pan India and wide product offerings. However, Ebitda (~Rs 13/kg, 10-12% margin) will be under check in coming quarters due to aggressive plans for hiring and advertising and promotion expense and to aid dealer’s return on investment. A Rs 5 billion capex is planned over FY24-26 to double capacity to ~290 kt and achieve 25% plus volume compound annual growth rate. Plants in the Eastern Uttar Pradesh and Maharashtra, at Rs 1.35 billion capex each, is likely to be operational in H2 FY25. We estimate 31%/27%/51%/98% CAGR in pipes-volume/revenue/Ebitda/profit after tax over FY23-25E, with return on capital employed of ~17% in FY25E. We expect Apollo Pipes to retain its fast-growing status, driven by pan-India aspirations and richer product mix towards non-agri value added product. Doubling of capacities in three-four years at Rs 5 billion capex and expansion in distribution should help the company in attaining its pan-India goals. While we remain upbeat on Apollo Pipes’ prospect, after recent run up in its scrip and at ~30 times FY25E price/earning, we downgrade our rating to 'Hold', with an unchanged target price of Rs 760 (32 times FY25E price/earning). Margin trajectory is the key monitorable in coming quarters..Click on the attachment to read the full report:.Prince Pipes - Strong Volume Recovery In Sight: Systematix.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Apollo Pipes - Focus On Volumes Over Margins: Systematix

Rs 5 billion capex plan over FY24-26 to drive 30% volume compound annual growth rate.

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Apollo Pipes - Focus On Volumes Over Margins: Systematix

Rs 5 billion capex plan over FY24-26 to drive 30% volume compound annual growth rate.

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