APL Apollo Tubes Q1 Results Review - Inline Performance With Healthy Volume Growth: IDBI Capital

IDBI Capital Report

APL Apollo Tubes Ltd.’s Q1 FY25 performance was in line with our expectations. Revenue grew 9.4% YoY to Rs 49.7 billion, driven by volume growth of 9.1% YoY. Gross margin improved 40 basis points YoY to 14.2%, thanks to a better product mix. However, Ebitda/tonne declined by 10% YoY to Rs 4,184 due to ESOP expenses and higher advertising and promotion cost.

APL expects margins to remain under pressure in Q2 FY25 due to declining steel prices, which is delaying inventory restocking by channel partners. However, APL expects margin to improve in H2 FY25 driven by a better product mix, a narrowing pricing gap between scrap steel products and BF steel products, and operating leverage from higher utilisation of new plants.

We cut our FY26 EPS forecast by 12% and value the stock at a PER of 36 times FY26 to derive a target price of Rs 1,693 (earlier Rs 1,814). We maintain Buy rating on the stock.

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