Motilal Oswal Sees 28% Upside and Strong Growth Momentum for Top Tube Maker

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Motilal Oswal Sees 28% Upside and Strong Growth Momentum for Top Tube Maker

By Malvika Gurung -- The domestic brokerage major Motilal Oswal (NS: MOFS ) continues to remain bullish on the country’s largest Structural Steel Tubes producer, APL Apollo (NS: APLA ) Tubes (APAT).

The brokerage firm has reiterated its ‘Buy’ call on the tube company and has set a target price of Rs 1,490/share on the stock.

At APL Apollo Tubes’ current market price, Motilal Oswal’s target price indicates a potential upside of 27.9%.

The tube manufacturer continues to remain Motilal Oswal’s top pick given its leadership position in the industry, which is witnessing growing applications, increasing adoption for government projects, rising consumption of structural steel tubes in public infrastructure, residential and commercial buildings, warehouses, factories, agriculture and other construction works.

All these tailwinds are expected to work in the favour of APL Apollo Tubes.

The domestic brokerage firm believes that APAT will continue to lead from the front and gain a larger pie in the growing structural tube market.

Prominent triggers that will sustain APAT’s growth momentum going forward include the company’s

  • rising demand across segments,
  • increased product penetration with the help of a robust distribution network,
  • an increase in the share of VAP, thus driving margins,
  • the introduction of Apollo Mart, and
  • Strong leadership position.

MS has projected APAT’s revenue/EBITDA/PAT CAGR of 15%/35%/40% over FY23–25 and values the mid-cap stock at 33 times the estimated FY25 EPS.

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