In its research report dated October 3, 2023, Motilal Oswal has expressed a bullish outlook on APL Apollo Tubes, offering a buy rating on the stock with a target price of Rs 1930.
Motilal Oswal’s research report delves into the recent visit to the newly commissioned Raipur plant of APL Apollo Tubes (APAT) and interactions with key personnel. The inception of the Raipur plant dates back to FY21, initiated by APL Apollo Building Products Pvt Ltd. (ABPL), a wholly-owned subsidiary of APAT, situated in Village Simga, Baloda Bazar district in Chhattisgarh, approximately 60 kilometers from Raipur Airport. The Raipur plant holds several critical aspects, including its status as the largest plant for the company, boasting an installed capacity of 1.2 million tonnes per annum (MTPA) with the potential for further expansion by 0.1 MTPA through debottlenecking.
Strategically positioned in proximity to raw material suppliers, the plant efficiently serves multiple regions due to its central location in India. Importantly, the Raipur plant specializes in manufacturing only value-added products (VAP), which contribute to an enhanced overall margin profile for the company. These plants also produce unique products, marking the first of their kind in both India and the world. While the plant was recently commissioned, production volume is rapidly increasing, with the target of achieving a quarterly run rate of 0.18-0.2 MTPA by 4QFY24.
The research report projects a robust revenue, EBITDA, and PAT compound annual growth rate (CAGR) of 25%, 43%, and 50%, respectively, over FY23–25. APL Apollo Tubes is valued at 33 times the estimated earnings per share (EPS) for September 2025 to arrive at a target price of INR 1,930. Motilal Oswal maintains its BUY rating on the stock.
This research report offers valuable insights for investors considering APL Apollo Tubes, emphasizing the strategic significance of the Raipur plant and its potential to contribute significantly to the company’s growth and profitability.
