Apollo Pipes Q2 Review - Muted H1, Management Optimistic On Delivering 35% Growth; Assign Buy: Yes Securities

Yes Securities Report

Though Apollo Pipes Ltd.'s demand is expected to improve H2 FY25 onwards, owing to weak performance in H1 FY25 we have revised our earnings estimates downwards by 34.5%/22% for FY25E/FY26E respectively largely due to lower volume growth.

We expect Apollo Pipes standalone volumes to grow by 15% compound annual growth rate with improvement in demand and new up-coming capacities over FY24-FY27E and KISAN’s performance should improve gradually.

With the company’s aggressive volume growth strategy and up-coming capex, we reckon Ebitda/Kg will be capped at Rs 10 for the coming two- years.

At current market price, the stock trades at P/E(x) 23 times on FY27E EPS of Rs 21.3. We have revalued the company at P/E(x) of 30 times on FY27E EPS, arriving at a target price of Rs 640. Hence, we upgrade the stock to a Buy rating.

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