IGI Logo

Expansion plans to boost outlook

APL Apollo Tubes (APAT) is a leading manufacturer of structural steel tubes with an annual production capacity of 4.3mn ton. It has a distribution network spanning 29 cities in India and 20 countries globally. In Q3FY25, Its sales mix comprises Apollo structural tubes (~71%), Apollo Z (~26%), and Apollo Galv (~4%), catering to a diverse range of customers and applications.

* In Q3FY25, APAT reported a revenue of Rs. 5,433cr, a significant 30.0% YoY growth, driven by increased sales volume.

* In Q3FY25, sales volume rose 37.1% YoY to 828,000 ton, mainly driven by strong growth in general (+44.6% YoY, 43.4% of sales) and light steel (+50.5% YoY, 17.2% of sales) segments, despite a challenging macro environment and weak retail demand.

* EBITDA grew 23.6% YoY to Rs. 346cr in Q3FY25 supported by higher revenue and operating leverage from a ramp up in capacity, while margins contracted 30bps YoY to 6.4% due to decline in realization.

* Reported profit after tax increased 31.1% YoY to Rs. 217cr, driven by improved operating performance and a 44.1% YoY rise in other income.

Outlook & Valuation

Robust volume growth helped APAT improve its performance in Q3FY25. The company is set to keep growing because of its dominant market share, higher volumes driven by a shift toward HR coil steel pipes, and rising international sales. Additionally, its focus on expanding into round pipes and improving EBITDA per ton has strengthened its position. APAT has entered the eastern markets (UP, Bihar, Odisha) and plans to set up plants here. This is expected to drive its revenue growth, while a greater focus on value-added products should continue to support margins. Therefore, we are optimistic about the company’s growth prospects and assign BUY rating on the stock, based on 31x P/E on FY27E adjusted earnings per share (EPS), with a target price of Rs. 1,768.

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345