APL Apollo Tubes at 'inflection point', says Motilal Oswal; maintains 'Buy'

Motilal Oswal has maintained its 'Buy' call on APL Apollo Tubes with the target price at ₹2,260per share

Motilal Oswal Financial Services believes APL Apollo Tubes is at a strategic inflection point, as it scales its manufacturing footprint to meet a recovery in structural steel demand. With a massive capacity expansion roadmap and a dominant 55 per cent market share, the company is well-positioned to capture a larger slice of India's infrastructure and construction growth. The brokerage has maintained its ‘Buy’ call on APL Apollo Tubes with the target price at ₹2,260per share. 

Market leader logs record Q3 volumes

India’s undisputed leader in structural steel tubes, APL Apollo Tubes, continued its volume momentum in Q3FY26, reporting record sales of about 917 KT, up 11 per cent year-on-year (Y-o-Y), the brokerage noted. The company currently operates 4.5 MTPA capacity across 11 manufacturing facilities, maintaining a consistent growth trajectory over the last eight quarters.

 

HRC volatility to weigh on Q3 spreads; Ebitda/tonne seen lower

The brokerage flagged that hot-rolled coil (HRC) prices declined 4 per cent quarter-on-quarter (Q-o-Q) in Q3, which could lead to inventory losses for the quarter. While HRC has risen about 8 per cent in the last 20 days following the imposition of a safeguard duty on steel imports, the brokerage expects near-term margin pressure, projecting Earnings before interest, tax, depreciation and amortisation Ebitda/MT at ₹5,000 for Q3 versus ₹5,228 in Q2. 

FY26 guidance intact despite sector softness

Despite a subdued industry backdrop, adjusted profit after tax (APAT) delivered 11 per cent Y-o-Y volume growth in M9FY26 and has maintained its FY26 volume growth guidance of 10–15 per cent. Support is coming from capacity expansion in growth markets like Dubai, the launch of the sub-premium brand ‘SG Premium’, and resilient private capex demand across infrastructure, solar, and manufacturing.

Capex plan: Capacity to hit 10 MTPA by FY30

APAT plans a ₹1,500 crore internally funded capex to scale capacity from 4.5 MTPA to 6.8 MTPA by FY28 and 10 MTPA by FY30. This includes 1.0 MTPA greenfield and 0.8 MTPA brownfield additions across India and Dubai. The brokerage noted that Dubai and Bhuj SEZ-led exports could eventually lift international volumes beyond 1 MTPA, accounting for 20 per cent of sales and structurally improving margins. 

Solar mounting structures are seen as a fresh growth lever

India’s 500 GW renewable target by 2030 is expected to create an 830 KT market for solar mounting structures. APAT is targeting a 15 per cent share (125 KT), which could translate into ₹300-500 crore in incremental revenue. The company benefits from premium pricing and the strategic proximity of its plants to solar-rich states.

 

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