Analyst Concall
APL Apollo sees growth uptick from H2, higher sales in FY27
This story was originally published at 20:09 IST on 24 July 2025
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--APL Apollo: To allocate available capital in almost equal quadrants of 25%
--CONTEXT: APL Apollo Tubes management's comments in post-earnings concall
--APL Apollo: Expect retail sales to improve this year on lower inflation
--APL Apollo: To spend capital equally on tax, capex
--APL Apollo: EBITDA declined QoQ mostly because of one-time employee costs
--APL Apollo: To shr part of capital with shareholders, keep 1/4th as buffer
--APL Apollo: Seek to be liability-free, buy in cash, get discounts
--APL Apollo: Dealers sitting light on inventory for past 18 months
--APL Apollo: Believe H2 FY26 to be significantly better for demand than H1
--APL Apollo: Won't be issuing any ESOPs in next 12 months
--APL Apollo: Dubai plant utilisation at 60%, Raipur plant bit less than 60%
--APL Apollo: See EBITDA spread at INR 4,600-INR 5,000 per tn in FY26
--APL Apollo:See FY26 sales volume rise 10-15% vs earlier guidance of 15-20%
--APL Apollo: Do not want to grow at expense of margins this time
--APL Apollo: Expect volume growth in FY27 to be higher than in FY26
--APL Apollo: Goal to achieve EBITDA spread of INR 5,500-INR 6,000 per tn
By Shreya Shetty and Sunil Raghu
MUMBAI/AHMEDABAD – APL Apollo Tubes Ltd. is confident that demand will be significantly better from the second half of 2025-26 (Apr-Mar) as it expects retail sales to improve and infrastructure demand to pick up once the monsoon season ends, the company's management said in a post-earnings conference call on Thursday.
The company expects volume growth in FY27 to be higher than in FY26, seeing a rise of more than 15-20% due to improvement in the macroeconomic environment and a revival of consumption in the country. The company's goal is to achieve an earnings before interest, tax, depreciation, and amortisation spread of INR 5,500-INR 6,000 per tonne.
The company will allocate available capital in almost equal quadrants of 25%, with one being reserved for tax, the second for capital expenditure, the third for shareholder reward in terms of dividend and buyback, and the fourth as a buffer to repay liabilities, it said. While the company is debt-free, the management said it aims to be liability-free and buy steel in cash to get better discounts from steel mills.
The company revised its sales volume guidance downwards to 10-15% from 15-20%, mainly due to a slowdown in demand in the first half of the year. However, retail sales, which comprise 50-60% of the company's volumes, are seen rising in the second half of FY26 due to a decline in inflation rates, the company said.
Revenue growth was largely driven by sales volume, which grew 10% on year to 794,000 tonnes in the June quarter, though it declined 7% on quarter. The drop in volume is largely due to greater geopolitical concerns, with domestic sales hit by India-Pakistan tensions and exports seeing a drop due to tensions between Israel and Iran, the company said. Demand was also affected by a weak macroeconomic environment and a slowdown in construction activity due to the early onset of the monsoon, it said.
Despite a drop in domestic and export demand, the steel pipe and tube maker does not want to increase its volumes at the expense of margins, especially since it expects demand to revive in the second half of the year.
The company's EBITDA per tonne rose 12% from a year ago to INR 4,683 per tonne. This was 4% lower on quarter due to employee costs arising out of the employee stock ownership plan issued more than a year ago, which has accrued now and are being converted. It expects employee costs to settle at INR 600-INR 700 per tonne from the prevailing INR 800-INR 900 per tonne. The company said it would not be issuing any employee stock ownership plan in the coming 12 months.
With the softening of hot rolled coil steel prices, the company expects dealers to restock massively. Dealers have been sitting light on inventory in the past 18 months due to higher steel prices, the management said.
APL Apollo's utilisation rate at its Dubai plant stands at 60%, while it is a "bit less" than 60% at its Raipur plant. End
US$1 = INR 86.41
Edited by Avishek Dutta
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