In its research report dated October 4, 2023, ICICI Securities expresses a bullish sentiment towards APL Apollo Tubes, recommending a buy rating on the stock with a target price of Rs 1930.
The report indicates that ICICI Securities conducted a visit to APL Apollo Tubes’ Raipur plant to gain deeper insights into the company’s manufacturing processes, operational readiness, and unique factors that contribute to its competitive advantage. The key takeaways from this visit include:
- Anticipated progressive improvement in the capacity utilization of the Raipur plant.
- Ongoing cold commissioning of the narrow flats products line, expected to stabilize in Q3FY24.
- Projections of achieving a production rate of 60–70 thousand tons per month in Q4FY24.
- The plant’s capability to produce a diverse range of differentiated products, including roofing sheets with a width of 1,500mm, which surpasses industry peers at 1,250mm.
Considering the imminent ramp-up of production and the potential for further expansion at the Raipur plant, ICICI Securities has raised its valuation multiple to 40x (previously 36x). As a result, the target price for APL Apollo Tubes has been revised to INR 1,930 from the earlier INR 1,740.
ICICI Securities maintains its ‘BUY’ rating for APL Apollo Tubes, reflecting confidence in the company’s growth prospects and its position in the market.
Investors are encouraged to take this research report into consideration when evaluating APL Apollo Tubes as a potential investment, acknowledging the factors that contribute to its positive outlook in the steel industry.
