Nuvama highlights APL Apollo Tubes’ record Q2FY26 volumes, with premium mix gains and margin support, despite channel liquidity challenges.
Why is Nuvama Bullish on APL Apollo Tubes Despite Weak Demand?
About APL Apollo Tubes:
APL Apollo Tubes is India’s leading structural steel tube manufacturer, catering to infrastructure, construction, and engineering industries. Known for its wide product portfolio, the company has consistently focused on expanding its value-added products (VAP) segment, which delivers higher margins compared to commodity-grade structures.
Q2FY26 Performance Overview
APL Apollo reported sales volumes of 855k tons in Q2FY26, marking a 13% YoY and 8% QoQ growth — the highest quarterly volumes ever, despite sluggish demand conditions. The achievement reflects strong operational execution and product mix improvements.
Channel Challenges and Demand Dynamics
While structural demand remains healthy, liquidity issues in distribution channels have weighed on sentiment. To offset this, APL Apollo offered selective discounts on general structural products. However, VAP categories continued to command premium pricing, sustaining profitability.
Rising Share of Value-Added Products
The company’s VAP mix climbed to 57% from 55% a year ago. This strategic focus on high-margin products strengthens earnings visibility and provides resilience in softer demand cycles.
Profitability Outlook
EBITDA per ton is projected at around ₹4,900, supported by operating leverage, higher VAP contribution, and absence of ESOP-related costs. This should enable the company to maintain stable margins even in a volatile demand environment.
Valuation Perspective
Nuvama values APL Apollo at 36x Q2FY28E EPS, reflecting confidence in the company’s growth trajectory, structural leadership, and premium mix strategy.
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What Should Investors Note?
Despite near-term liquidity concerns in the distribution chain, APL Apollo’s strong volume growth, higher VAP mix, and operating leverage provide confidence in sustained earnings growth.
🎯 Nuvama’s revised target price of ₹2,039 highlights its bullish stance, driven by margin stability and leadership in the structural steel tube space.
Investor Takeaway
APL Apollo continues to prove its ability to deliver strong growth in challenging markets. The rising share of premium products and robust volume execution make it a structural growth story in India’s infrastructure and construction sector. More such analysis can be explored at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
