Equity Analysis /
India

IN : APL Apollo Tubes - Volume & margins to improve going ahead

    CGS-CIMB
    27 July 2022
    Published byCGS-CIMB

    Steep correction in HRC steel prices (22% in Apr-Jul 2022) led to high channel destocking, resulting in lost sales volume of 60kt (1QFY23 sales: 423kt). Management maintains volume guidance of 2.2-2.3mt/4mt for FY23F/FY25F. New Raipur plant will lead to meaningful uptick in volume/margin in 2HFY23F. We rationalize EBITDA/t to Rs4,800/Rs5,250 for FY23F/FY24F, respectively. Retain Add with a new TP of Rs1,145. Risk: Sudden fall in HRC steel prices.