Motilal Oswal Maintains BUY Rating on APL Apollo Tubes with ₹2,260 Target Price
Motilal Oswal reiterates BUY rating on APL Apollo Tubes with ₹2,260 target price, highlighting the company's 55% market share leadership and record Q3FY26 sales of ~917KT (+11% YoY). Despite HRC price volatility impacting margins, the company maintains 10-15% FY26 volume growth guidance supported by capacity expansion and new product launches. The brokerage projects strong 14%/29%/33% CAGR in revenue/EBITDA/PAT over FY25-28.
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Motilal Oswal has maintained its BUY rating on APL Apollo Tubes with a target price of ₹2,260.00, citing the company's strong market position and consistent growth trajectory despite industry headwinds.
Market Leadership and Operational Performance
APL Apollo Tubes holds a dominant position as India's undisputed market leader in structural steel tubes with significant operational scale:
| Parameter: | Details |
|---|---|
| Market Share: | 55% |
| Manufacturing Capacity: | 4.50 MTPA |
| Manufacturing Facilities: | 11 locations |
| Q3FY26 Sales Volume: | ~917KT |
| Volume Growth (Q3FY26): | +11% YoY |
The company has demonstrated remarkable consistency, delivering volume growth across the last eight quarters and achieving record sales in Q3FY26.
HRC Price Impact and Margin Outlook
Hot Rolled Coil (HRC) price movements have created both challenges and opportunities for the company:
| HRC Price Movement: | Change |
|---|---|
| Quarter-on-Quarter (Q3): | -4% |
| vs. Q1 Comparison: | -8% |
| Recent 20-day trend: | +8% |
The recent HRC price increase follows the imposition of safeguard duty on steel imports. However, the Q3 price decline is expected to result in inventory losses, with Motilal Oswal projecting EBITDA per MT of ₹5,000.00 for Q3 compared to ₹5,228.00 in Q2.
Growth Strategy and Market Positioning
Despite industry softness, APL Apollo Tubes has maintained strong momentum with 11% YoY volume growth in 9MFY26. The company's growth strategy encompasses several key initiatives:
- Capacity expansion in high-growth regions, including Dubai
- Launch of sub-premium brand 'SG Premium'
- Leveraging healthy private-sector demand across infrastructure, solar, and manufacturing segments
- Maintaining FY26 volume growth guidance of 10-15%
Financial Projections and Valuation
Motilal Oswal expects robust financial performance over the forecast period:
| Growth Metric (FY25-28 CAGR): | Projected Rate |
|---|---|
| Revenue: | 14% |
| EBITDA: | 29% |
| PAT: | 33% |
| Valuation Multiple: | 35x FY27E EPS |
The brokerage's target price of ₹2,260.00 reflects confidence in the company's ability to capitalize on market opportunities and execute its expansion strategy effectively, maintaining its position as the structural steel tubes market leader.
Historical Stock Returns for APL Apollo Tubes
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.24% | -4.06% | +8.87% | +8.54% | +22.85% | +292.91% |
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