APL Apollo Tubes

APL Apollo Tubes reported a topline of Rs. 1896.83 cr sequentially down 9.54% compared to same period last year. EBITDA for the quarter ended March 2020, came in at Rs. 119.86 cr with EBITDA margin of 6.35%. The company reported PAT of Rs. 60.79 cr in Q4 FY20, down 1.47% on Q-o-Q basis from Rs. 61.70 cr reported in Q4 FY19.

The company also announced its sales volume performance for the quarter ending June 30, 2020. It registered sales volume of 238,311 tons in Q1FY21 (61% of Q1FY20 volume and 59% of Q4FY20 volume).

With strengthening balance sheet, plans to becoming debt free, improving free cash flow and better working capital cycle; management is touching all the right points to take the company ahead. We believe the fall in demand outlook of building material segment would be recovered by market share gains from competitors and increasing infrastructure segment sales. As the company trades at fair valuation of 18.22x FY20 earnings of Rs. 238 cr we recommend to Buy on Dips.