Equities. Commodities. Metals & Mining

Rahul Jain

Equity Bottom-Up

<ul>
<li>APL Apollo has raised its capex guidance to accelerate growth in high-margin, value-added products (VAP) and new segments like heavy structural tubes, pre-engineered buildings, and solar structures.</li>
<li>Margins have recovered from Q2 lows but remain subdued due to weak steel prices. Sales volumes have grown at an 18% CAGR.</li>
<li>Trading at 65x TTM P/E vs. a 5-year average of 50x. A strong execution track record and RoCE &gt;25% provide confidence in growth execution.</li>
</ul>


APL Apollo has raised its capex guidance to accelerate growth in high-margin, value-added products (VAP) and new segments like heavy structural tubes, pre-engineered buildings, and solar structures.
Margins have recovered from Q2 lows but remain subdued due to weak steel prices. Sales volumes have grown at an 18% CAGR.
Trading at 65x TTM P/E vs. a 5-year average of 50x. A strong execution track record and RoCE &gt;25% provide confidence in growth execution.


APL Apollo Tubes (APAT IN) Stepping up the Gas on Capacity Expansions

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>EBITDA/t rebounds QoQ after weak Q2FY25 show: APL Apollo managed to pull back its EBITDA/t at Rs 4,173/t in Q3FY25, inline with the guidance range of Rs 4,000-4,500/t.</li><li>EBITDA/t improved despite continued macro headwinds in Q3FY25.</li><li>The company managed to grab the market share of its competitors, mainly from the secondary Patra market, as the spread between HRC and Patra narrowed. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

EBITDA/t rebounds QoQ after weak Q2FY25 show: APL Apollo managed to pull back its EBITDA/t at Rs 4,173/t in Q3FY25, inline with the guidance range of Rs 4,000-4,500/t.EBITDA/t improved despite continued macro headwinds in Q3FY25.The company managed to grab the market share of its competitors, mainly from the secondary Patra market, as the spread between HRC and Patra narrowed. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

APL Apollo Tubes Ltd - Strong Q3 Performance Despite Macro Headwinds

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>APL Apollo Tubes (APAT) reported the fourth consecutive quarter of weak operating performance (EBITDA/MT down 62% YoY in 2Q) on account of inventory loss of ~INR1.5b (led by a fall in steel prices) and higher discounting during the quarter.</li><li>Revenues grew marginally at 3% YoY led by volume growth (up 12% YoY), which was partially offset by a decline in realizations (down 8% YoY).</li><li>With higher inventory loss being booked in 2Q, we see a lower possibility of any major inventory loss in 2H.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

APL Apollo Tubes (APAT) reported the fourth consecutive quarter of weak operating performance (EBITDA/MT down 62% YoY in 2Q) on account of inventory loss of ~INR1.5b (led by a fall in steel prices) and higher discounting during the quarter.Revenues grew marginally at 3% YoY led by volume growth (up 12% YoY), which was partially offset by a decline in realizations (down 8% YoY).With higher inventory loss being booked in 2Q, we see a lower possibility of any major inventory loss in 2H.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

APL Apollo Tubes - Inventory Losses; Higher Discounting Hurts Margins

<ul><li>EBITDA/t Miss led by inventory loss: Q2FY25 EBITDA/t declined to an all-time low of Rs 1,821/t (down 62%/56% YoY/QoQ) led by the impact of inventory loss and sales discount as traders were in destocking mode amidst falling steel prices. Steel prices declined by ~Rs 7,500/t QoQ in Q2FY25.</li><li>Management believes that the worst is now behind and expects margins to expand to a normalised level of Rs 4,500-5,000/t over the next 2-3 quarters. </li><li>These margins will be sustained throughout FY26. The company targets EBITDA/t of Rs 5,040/t by FY27.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

EBITDA/t Miss led by inventory loss: Q2FY25 EBITDA/t declined to an all-time low of Rs 1,821/t (down 62%/56% YoY/QoQ) led by the impact of inventory loss and sales discount as traders were in destocking mode amidst falling steel prices. Steel prices declined by ~Rs 7,500/t QoQ in Q2FY25.Management believes that the worst is now behind and expects margins to expand to a normalised level of Rs 4,500-5,000/t over the next 2-3 quarters. These margins will be sustained throughout FY26. The company targets EBITDA/t of Rs 5,040/t by FY27.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

APL Apollo Tubes Ltd - EBITDA/T Miss on Inventory Loss

<ul><li>Near-term pressure on EBITDA/t to ease gradually as steel prices stabilise: The company’s EBITDA/t stood at Rs 4,183/t, down 10% YoY due to certain one-off expenses in employee and other expenses.</li><li>Excluding these expenses, EBITDA/t would have been higher by Rs 150/t. In Q2FY25, EBITDA/t could remain under pressure as dealers are not in the restocking mode as steel prices continue to correct.</li><li>In FY25, the company targets to achieve flat EBITDA/t YoY. However, going ahead from FY26 onwards, multiple levers are present to increase EBITDA/t towards Rs 5,000/t.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Near-term pressure on EBITDA/t to ease gradually as steel prices stabilise: The company’s EBITDA/t stood at Rs 4,183/t, down 10% YoY due to certain one-off expenses in employee and other expenses.Excluding these expenses, EBITDA/t would have been higher by Rs 150/t. In Q2FY25, EBITDA/t could remain under pressure as dealers are not in the restocking mode as steel prices continue to correct.In FY25, the company targets to achieve flat EBITDA/t YoY. However, going ahead from FY26 onwards, multiple levers are present to increase EBITDA/t towards Rs 5,000/t.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Apl Apollo Tubes Ltd - EBITDA/T Miss; Multiple Levers for Improvement Ahead

India

APL Apollo Tubes Ltd. manufactures and exports galvanized steel tubes, galvanized steel pipes, and welded black pipes and tubes.

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Apl Apollo Tubes (APAT IN)