India: APL Apollo Tubes shows robust performance in Q1FY'25

APL Apollo Tubes Limited, a leading manufacturer of structural steel pipes in India, reported growth in sales volumes, revenue, EBITDA, and net profit for the first quarter of financial year 2025 (FY'25) (Q1 FY'25), ending 30 June, 2024, as discussed during their investor call on 12 July, 2024.

The company recorded sales of 0.721 million tonnes (mnt) in Q1FY'25, marking a 6% increase q-o-q from 0.679 mnt in the previous quarter Q4FY'24. The volume also rose by 9% y-o-y compared to 0.662 mnt in Q1FY'24.

Value-added products, such as heavy structural steel tubes and coated options, have been a key driver of sales growth for the company. The sales mix of these value-added products increased to 60% in Q1FY'25 from 57% in Q1FY'24.

EBITDA performance:

EBITDA per tonne increased slightly by 1% q-o-q to INR 4,183/t in Q1, up from INR 4,132/t in the previous quarter. However, this figure represented a 10% decline y-o-y from INR 4,645/t in Q1FY'24.

The company's EBITDA rose to INR 3,016 million in Q1, reflecting an 8% increase q-o-q from INR 2,804 million in the previous quarter. However, this was a 2% decrease y-o-y from INR 3,072 million in Q1FY'24.

Revenue growth:

Revenue grew by 4% q-o-q to INR 49,743 million in Q1, compared to INR 47,657 million in Q4FY'24. On a y-o-y basis, revenue increased by 9% from INR 45,449 million in Q1FY'24.

Net profit:

The company's net profit increased by 13% q-o-q to INR 1,932 million in Q1, up from INR 1,704 million in the previous quarter. However, the net profit remained unchanged y-o-y compared to the same quarter in FY'24.

Capacity expansion plan:

Over the past four years, APL Apollo Tubes has invested approximately INR 23.7 billion in its capacity expansion program. The plan aims to increase production capacity from 3.6 mnt per annum (mntpa) to 5 mntpa by FY'25, focusing on both existing and new facilities.

A significant portion of this additional capacity, 0.9 mntpa, will be achieved through brownfield optimisation, while 0.5 mntpa will be generated from greenfield projects. Notably, 70% of the upcoming capacity will be dedicated to producing value-added products. Additionally, the company plans to commission new blast furnace hot-rolling (HR) mills within the next 3-4 years, which will enhance the supply of HR coils in India.

Raipur plant updates:

APL's Raipur plant is steadily ramping up production, achieving 55% capacity utilisation in March 2024, just a year after beginning operations. The plant currently produces 1.2 mntpa of heavy, super heavy, light, and coated products, with plans to expand its capacity to 6 mntpa by the end of FY'25. This growth is being driven by a strong emphasis on operational efficiency and reliability.

Global expansion:

The company's global expansion efforts are progressing well. Its new Dubai facility is now operational and has already attracted strong interest from steel tube distributors worldwide.

Outlook:

Despite challenging demand conditions in the structural steel industry due to general elections and a slowdown in retail spending, APL Apollo Tubes delivered strong overall performance in Q1FY'25. The company strategically offered discounts to maintain sales volumes.

Looking ahead, the company is optimistic about demand growth in the near term, supported by increased government budget allocations for infrastructure and favourable monsoon conditions.