APL Apollo Eyes a 60% Capacity Jump as It Battles to Defend Its 60% Market Share

Synopsis: APL Apollo is navigating short-term challenges while strengthening its long-term growth plans through higher capacity, better product mix, and expansion into new sectors, supported by steady demand expectations. 

The shares of this mid cap company majorly engaged in manufacturing steel products MS Black Pipes, Galvanised Tubes, Pre-Galvanised Tubes, Structural ERW Steel Tubes and many more were in focus after the brokerage sees around 20 percent upside  potential. 

With the market capitalization of Rs. 50,145 Crores, the shares of APL Apollo Tubes Ltd were trading at around Rs. 1806 per share which is 21 percent discount from its 52 week high of Rs. 2301 per share and is trading at a P/E of 41.7 whereas industry P/E stands at 21.8

Brokerage View

Motilal Oswal has reiterated its ‘Buy’ rating on APL Apollo Tubes with a target price of ₹2,150, implying an upside potential of around 20% from the current market price of Rs. 1806 per share. The brokerage believes the company is well positioned for a stronger recovery, supported by improving EBITDA per tonne through cost optimisation and a higher share of value-added products.

 It also expects long-term growth to be driven by rising demand for structural steel tubes, expansion into solar structures and data centres, and the planned increase in manufacturing capacity from 5 MMT to 8 MMT by FY28.

Demand Faces Temporary Pressure

APL Apollo, which holds an estimated 55-60% market share in India’s structural steel tubes industry and has a manufacturing capacity of 5 million metric tonnes (MMT) across 11+ plants, is witnessing temporary demand headwinds. Slower infrastructure activity, higher construction costs, dealer destocking due to volatile hot rolled coil (HRC) prices and disruptions at its Dubai facility following the West Asia crisis have affected volumes. 

Despite these challenges, the company delivered 11% YoY volume growth in FY26, outperforming the listed industry average of around 10%, supported by market share gains and wider adoption of its products. 

Management expects demand to improve as infrastructure activity picks up, HRC prices stabilise and the Dubai plant returns to normal operations. It expects 11% volume growth in FY27, although this remains below its earlier guidance of 15-20%.

Margin Improvement Remains the Key Focus

While volumes remain under pressure, the company is prioritising profitability. It expects EBITDA per tonne to increase to ₹5,580 in FY27 from ₹5,161 in FY26, driven by cost-saving initiatives and a richer product mix. Value-added products (VAP) currently contribute 58% of sales and are expected to rise to 65-70% over the next few years. 

These efforts are likely to help the company achieve the lower end of its 20-25% EBITDA growth guidance, with FY27 EBITDA estimated at around ₹21.6 billion, even if volume growth remains moderate.

Capacity Expansion Supports Long-Term Growth

APL Apollo continues to invest for future growth despite near-term challenges. The company plans to expand its manufacturing capacity by 60%, from 5 MMT to 8 MMT by FY28, through new plants at Gorakhpur, Siliguri, Malur and a proposed west coast facility, along with debottlenecking and modernisation projects.

It is also expanding into high-growth areas such as solar structures and data centres, where demand for structural steel is expected to rise rapidly. The brokerage estimates a 13% revenue CAGR and 18% CAGR each in EBITDA and PAT during FY26-FY28, supported by rising adoption of structural steel tubes across housing, infrastructure and industrial applications. 

Conclusion: 

APL Apollo is working through near-term market challenges by focusing on improving profitability, expanding its manufacturing footprint, and increasing the share of higher-value products. With its strong position in the structural steel tubes market and growing presence in sectors such as solar structures and data centres, the company remains well placed to benefit from improving demand and deliver steady long-term growth.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post APL Apollo Eyes a 60% Capacity Jump as It Battles to Defend Its 60% Market Share appeared first on Trade Brains.