APL Apollo Tubes Limited, India’s leading branded structural steel tubes manufacturer, is looking to achieve a double-digit growth of INR 5,000/tonne in EBITDA margins by FY’25 through continuation of measures like cost-control, new innovations and other value-additions, the company said at an investor’s call to announce its third quarter (Q3) results.
The company is also focusing on a capex increase from the existing 2.6 mnt to 4 mnt in FY’25. The capex is expected to be completed by FY’22-23 and the company is expecting to emerge stronger in 2-3 years.
The company continues to concentrate on a value-added products mix which contributed 65% of total sales in Q3 FY’22. In Q3, the company’s value-added products accounted for EBITDA of more than INR 4,000/tonne (t) compared to standard products with EBITDA/t of around INR 2,000/t.
The upcoming 400-acre plant in Raipur will commence in phases from H1FY’23 with total capacity of 1.5 million tonnes (mnt), 100% value-added products and total capex of INR 800 crore.
Other highlights
Q3 sales volume down 17% y-o-y: The company registered a 17% y-o-y decline in its sales volume to 403,000 t in Q3FY’22 compared to 486,000 t in Q3 FY’21. Material restocking among channel partners in anticipation of a price revision and price gap between primary and secondary ERW pipes contributed to the decrease in sales volumes. Meanwhile, on an quarterly basis, sales volumes declined by 6% in Q3.
Raipur plant update: The upcoming greenfield Raipur plant spread across 1.5 mn square feet, will manufactire three types of products. These are the Apollo column of 0.5 mnt capacity with high diameter and high thickness sizes up to 500 mm X 500 mm; coated tubes of 0.5 mn t capacity, and coated products of 0.5 mn t capacity.
APL Apollo expects to achieve double-digit growth from these value-added products over the next three years.
Update on net working capital cycle and net debt: Net working capital cycle sustained at 10 days in Q3 FY’22. Net debt declined 19% on solid free cash flow generation.
Ongoing projects
- Seven hospitals are to be constructed in 150 days in Delhi and work is on in full swing. Around 2.2 mn sq ft of built-up area is to be constructed using tubular technology.
- Apollo Mart, a technology and logistics trading platform for a large set of customers and suppliers, is to become India’s largest full-stack marketplace for APL Apollo steel building materials.
“Post pandemic, the economy has remained resilient from late July which gives good visibility for the rest of FY’22, and which is likely to reflect in the upcoming quarters,” said Sanjay Gupta, Chairman, APL Apollo Tubes.
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