APL Apollo records highest ever sales in Q3FY23

India's leading structural steel pipe manufacturer, APL Apollo Tubes Limited, has announced its financial results for the quarter ending 31 December, 2022. The company has posted its highest quarterly sales volume. However, earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin was lower, SteelMint learnt from company's investors' call held on 2 February, 2023.

Sales volume up y-o-y: The company's sales volume was recorded at 605,000 tonnes (t) in third quarter of financial year 2023 (Q3FY23), up 50% against the same period last year. Sales rose marginally by 1% q-o-q.

The company reported its highest quarterly sales to date due to its continued focus on adding value-added products (VAP) to its portfolio, officials said. The residential segment accounted for 50% of sales, the commercial segment for 25% and the infrastructure segment for the remaining 25%.

The partnership with Shankara Building Products has proven fruitful in the first nine months of FY'23 with a 170% y-o-y increase in sales. Now, that Raipur products are coming on stream, Shankara will become a stronger partner in promoting value-added products.

EBITDA per tonne margin drops y-o-y: EBITDA per tonne dropped by 10% y-o-y to INR 4,510/t in Q3FY23. However, the same rose by 17% compared to INR 3,850/t in the preceding quarter. After global commodity prices stabilised in September-October, channel inventories were replenished and the Raipur plant, which had negative operating leverage in the second quarter, has now turned into positive operating leverage, which will continue to improve further.

Raipur plant update: The Raipur plant is progressing as expected and all three complexes are fully operational. EBITDA per tonne from the Raipur plant in Q3FY23 was INR 3,146/t at 25% utilisation. As utilisation continues to increase, margins will increase to the expected levels of beyond INR 5,000/t. In addition, the company has launched two new products, one is 500x500mm structural steel pipe and the other is colour coated products for roofing applications.

Heavy structural segment: The company now has some prestigious projects where work has started on pipe structures. In the last six months, the company has focused on railroad and water infrastructure. Currently, the design team is working on 10 out of 25-30 railway stations that have already been commissioned and more will be added in the next 2-3 years.

In water infrastructure segment, company has successfully demonstrated a sample of tubular structures in Uttar Pradesh, if approved by the government this could throw a huge opportunity for heavy structural segment.

Super value-added products: Value-added products contributed 63% of total sales in FY22 compared to 42% in FY18. Furthermore, the company is focusing very aggressively to increase the sales of super value-added products in portfolio.

Steel for Green: APL Apollo is the first company to innovate readymade chaukhat, fence, plank and hand rails as steel for green concept which replaced conventional wood application in building construction. Also, the first company to innovate narrow and thicker colour coated galvanised sheets which will save more trees.