Motilal Oswal initiates coverage on APL Apollo Tubes, here’s why

Motilal Oswal has initiated coverage on APL Apollo Tubes with a buy rating and a target price of Rs 2,065, which is a 21 percent potential upside from current levels. The stock has nearly doubled in the last one year.

The company is the largest manufacturer of structural steel tubes in India and Motilal Oswal believes that the merger with Apollo Tricoat Tubes is margin and RoE accretive. According to the firm, this will create value for the shareholders.

The brokerage house expects 20 percent revenue and 35 percent profit after tax (PAT) CAGR over the next four years between FY21 and FY24 led by increase in EBITDA/tonne and higher sweating of assets.