Motilal Oswal has given Buy recommendation for APL Apollo Tubes recommended buy rating on the stock with a target price of Rs 1270 in its researc with a target price of Rs. 1270 in its research report issued on May 22, 2022

Motilal Oswal’s research report on APL Apollo Tubes

We visited the site of the Guru Teg Bahadur (GTB) Hospital to observe the shifting trends in the Structural Tube industry, driven by the increasing acceptance of steel tubes and its growing consumption in Construction projects. The key drivers of APAT’s performance include: a) growing demand across product segments, b) increased product penetration, with a robust distribution network, c) an increase in the share of VAP, driving margins, d) the introduction of Apollo Mart, and e) its market leadership position.

Outlook

We expect a revenue/EBITDA/PAT CAGR of 25%/25%/34% over FY22-24 and a strong cumulative CFO/FCF generation of INR17.7b/INR9.8b over FY23-24. APLL is expected to turn net cash positive by FY24. We value the stock at 35x FY24E EPS. Our TP of INR1,270 per share. We maintain our Buy rating.

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