APL Apollo Tubes Q2 Results Review - Margins Weak But Likely To Be Restored In H2: IDBI Capital
Its Ebitda was lower by 16% QoQ to Rs 3,850/tonne mainly led by weaker product mix and channel de-stocking.
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IDBI Capital Report
APL Apollo Tubes Ltd.'s Q2 FY23 profitability was weaker than our estimate. Ebitda/tonne was fell by 26% YoY to Rs 3,850 due to weaker product mix and channel destocking despite higher volume growth (up 41% YoY to 602,000 tonnes).
Nevertheless, Ebitda/tonne over Rs 5,000 is likely to be sustainable over the longer term in our view; APL Apollo Tubes targets over 20% compound annual growth rate volume growth over FY22-25 backed by 1.5 million tonnes capacity expansion at Raipur; we expect the company to become debt free in FY24.
We have cut our FY23 Ebitda estimate by 8% but broadly maintain our FY24 forecasts.
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