India: APL Apollo Tubes show decline in quarterly figures in Q3FY'24
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APL Apollo Tubes Limited, a leading manufacturer of structural steel pipes in India, experienced a decline in sales volume, revenue, EBITDA, and net profit for the third quarter of FY'24, ending 31 December, 2023, as discussed during their investor call on 29 January, 2024.
The pipe maker recorded sales at 0.604 million tonnes (mnt) in Q3FY'24, which declined by 11% q-o-q basis from 0.675 mnt in the previous quarter. The volume remains unchanged y-o-y in the same quarter of the previous year. Sales in Q3FY'24 were lower than expected due to retailers reducing their inventory in anticipation of price drops
The value-added products sales increased q-o-q to 59% in Q3FY'24 against 54% in Q2.
The company's value-added products, like heavy structural steel tubes and coated offerings, are driving significant sales growth.
EBITDA falls in Q3
EBITDA per tonne fell by 4% q-o-q to INR 4,631/t in Q3 from INR 4,817/t in the previous quarter. The same edged up by 3% y-o-y compared to INR 4,510/t in Q3FY'23.
EBIDTA was INR 2,796 million in Q3, fell by 14% q-o-q from INR 3,250 million in the previous quarter. Moreover, it inched up by 2% y-o-y from INR 2,729 million in Q3FY'23.
Revenue growth:
The company saw a decrease of 10% q-o-q in revenue to INR 41,778 million in Q3 against INR 46,304 million in Q2. Moreover, on a y-o-y basis, revenue edged down by 3% compared to INR 43,271 million in Q3FY'23.
Net profit:
Company's net profit fell by 18% q-o-q to INR 1,655 million in Q3 compared to INR 2,029 million in the previous quarter. In addition, the same inched down by 2% y-o-y against INR 1,692 million the same quarter of FY23.
Capacity increase:
The company's capacity expansion plan from 3.6 million tonnes per year (mntpa) to 5 mntpa by FY'25 prioritises both established and new facilities. While 0.9 mntpa of the additional capacity will be derived from brownfield optimisation, 0.5 mntpa will come from greenfield projects, showcasing their commitment to future growth. Notably, 70% of this upcoming capacity will focus on value-added products.
Raipur plant updates:
The ramp-up from Greenfield plant in Raipur is on expected lines with utilisation levels reaching 53% in December 2023. The plant is having current capacity of 1.2 mtpa and it is planning to increase its capacity by 5 mtpa by FY'25 for heavy, super heavy, light and coated products. Moreover, Raipur plant has the potential to generate over INR 70 billion in revenue and INR 6 billion in EBITDA.
Upcoming project:
In a major expansion move, the company is establishing a new steel plant in East India with an annual capacity of 0.2 mnt. This marks the company's entry into the East Indian steel market, alongside its ongoing construction of its first overseas plant in Dubai, boasting a capacity of 0.4 mntpa.
Outlook
The company's positive development is underway, driven by both re-stocking activities and strategic shift towards the upstream steel sector. The company is optimistic about the potential for this shift, particularly as steel mill capacity increases. Despite this focus on upstream expansion, they remain committed to maintaining their 5 mnt sales volume target by FY'26.