APL Apollo is India’s largest producer of electric resistance welded (ERW) steel pipes with 50% market share. Over the years, through organic and inorganic initiatives, the company enhanced its ERW capacity, which is currently ~2.5x its nearest competitor. These pipes have wide application with major use in the infrastructure sector for water, gas and other liquids. Value added steel pipes finds application in building and construction and has been a driving sales and profitability. Low cost of production and extensive distribution network large number of SKUs are major advantages. We have an over weight rating on the stock due to aggressive expansion plans particularly in value added products and further market share gains from unorganized sector. Covid-19 and volatile pricing has impacted sales but have now rebounded as the nature of products is such that demand does not evaporate, it is only postponed
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