APL Apollo Tubes Limited, a leading manufacturer of structural steel pipes in India, showed robust growth in sales volume and revenue for the fourth quarter of FY’24 (Q4FY’24), ending 31 March, 2024. However, EBITDA per tonne(t) and net profit saw a decline in Q4, the company discussed during their investor call on 13 May, 2024.
The pipe maker recorded sales volume of 679,000 tonnes (t) in Q4FY’24, which increased by 4% y-o-y from 650,000 t in Q4FY’23. The same went up by 12% q-o-q against 604,000 t in Q3FY’24.
The value-added products sales mix increased q-o-q to 60% in Q4FY’24 against 59% in Q3. The company’s value-added products, like heavy structural steel tubes and coated offerings, are driving significant sales growth.
Revenue growth:
The company saw an increase of 8% y-o-y in revenue to INR 47.7 billion (bn) in Q4FY’24 against INR 44.3 bn in Q4FY’23. Moreover, on a q-o-q basis, revenue went up by 14% compared to INR 41.8 bn in Q3FY’24.
EBITDA/t falls in Q4
EBITDA/tonne (t) fell by 17% y-o-y to INR 4,132/t in Q4 from INR 4,970/t in the same quarter of FY’23. The same decreased by 11% q-o-q compared to INR 4,631/t in Q3FY’24.
EBIDTA was INR 2.804 bn in Q4, down by 13% y-o-y from INR 3.229 bn in Q4FY’23. However, it remained marginally stable q-o-q from INR 2.796 bn in Q3FY’24.
Net profit:
Company’s net profit fell by 16% y-o-y to INR 1.704 bn in Q4 compared to INR 2.018 in Q4FY’23. In addition, the same dropped by 3% q-o-q against INR 1.655 in Q3FY’24.
Capacity expansion plan :
The company invested around INR 23.7 bn in last 4 years in its capacity expansion programme. Their capacity expansion plan aims to increase production from 3.6 million tonnes per year (mntpa) to 5 mntpa by FY25, with a focus on both existing and new facilities. A significant portion of the additional capacity, 0.9 mntpa, will be achieved through brownfield optimisation, while 0.5 mntpa will be generated from greenfield projects, demonstrating our dedication to future growth. It is important to highlight that 70% of the upcoming capacity will be dedicated to the production of value-added products.
In addition, company is planning for commissioning of new blast furnace hot-rolling (HR) mills in next 3-4 years which will increase supply of HR coil in India.
Raipur plant updates:
The ramp-up from greenfield plant in Raipur is on expected lines with utilisation levels reaching 55% in March 2024. 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.
APL’s Raipur plant is ramping up production after nearly a year of successful operation. They’re achieving this growth while prioritising efficiency and reliability.
Global expansion:
The company is also expanding globally. Their Dubai facility is now operational, allowing them to better serve international customers. Initial sales figures look promising, with strong interest from steel tube distributors worldwide.
Outlook
While Q4FY24 witnessed slightly weaker performance due to pre-election jitters and a slowdown in retail spending, the company strategically offered discounts to maintain sales volume. In addition, they are encouraged to see strong sales growth in their value-added product portfolio such as the heavy structural steel tubes and coated products.