APL Apollo Tubes gains over 11% in 4 days; UBS upgrades to 'Buy', raises TP

APL Apollo Tubes shares gained 3.3 per cent in Friday's trade on BSE amid a strong earnings outlook. The stock logged an intraday high at Rs 1,598.5 per share. The stock rallied for the fourth straight session and gained over 11 per cent.

 

Around 10:27 AM, APL Apollo share price was up 2.32 per cent at Rs 1,583 per share on BSE. In comparison, the BSE Sensex was down 0.36 per cent at 76,765.89. The market capitalisation of the company stood at Rs 43,800.31 crore. The 52-week high of the stock was at Rs 1,729.45 per share and the 52-week low was at Rs 1,253 per share. 

 

Global brokerage UBS has upgraded APL Apollo Tubes' stock to 'Buy' from 'Neutral' and has raised the target price to Rs 1,900 from Rs 1,600 per share. The revised target price, as per the brokerage, is driven by earnings, a six-month roll-forward, and a change in price-to-equity (PE) to 36x from 35x, which is close to the five-year average.

 

Also, UBS reckons that the company can positively surprise the market on sustained demand momentum. The stock has been largely flat for the past 18 months and with the recent correction, its PE multiple is down around 20 per cent from its peak, making it attractive. 

 

UBS channel check was done after the company report strong Q3 volumes. The company registered the highest ever sales volume of 828,200 ton in Q3FY25 compared to 758,267 ton in Q2FY25 and 603,659 Ton in Q3FY24. For 9MFY25, the company reported sales volume of 2,307,531 ton, an increase of 19 per cent  year-on-year (Y-o-Y).  As per the channel Check, APL's growth momentum is likely to remain, aided by customers shifting from refurbished steel to hot-rolled coil (HRC) structural steel tubes. 

 

HRC prices, which are inversely correlated with APL volumes historically, are down around 14 per cent Y-o-Y over the past 6 months, which is positive for APL Apollo's volume growth. 

 

Discussions with channel partners also suggested market share gains for APL and a stable infrastructure and construction demand environment. 

 

Moreover, UBS expects APL Apollo Tubes to register mid-to-high-teen revenue growth over the medium-to-long term, supported by the government's continued focus on infrastructure (airports, metros, railways, etc) and recent rural housing and solar rooftop schemes. 

growth.

 

As per APL Apollo Tubes' official website, with a capacity to produce 3.6 Million Tonnes per annum, APL Apollo Tubes Limited is the largest producer of Structural Steel Tubes in India. We have an extended distribution network of warehouses and branch offices in 29 cities across the country catering to domestic as well as 20 countries worldwide.

 

In the past one year, APL Apollo Tubes shares have gained 2.6 per cent against Sensex's rise of 7.7 per cent.