APL Apollo Tubes Limited, India’s leading branded structural steel tubes manufacturer, is looking to achieve its targeted 4 million tonnes (mn t) of capacity expansion by 2025 from the current 2.6 mn t, the company said at an investor’s call to announce its fourth quarter (Q4) results.
Further, the company’s Q4 net profit jumped 121% year-on-year (y-o-y) to INR 134.4 crore, compared to INR 60.8 crore in Q4 FY ’20.
In FY ’21, net profit stood at INR 407.7 crore, up 59% against FY ’20.
Key takeaways:
1.Q4 sales volume up 8%-The company registered an 8% rise in its sales volume to 435,000 tonne(t) in Q4 FY21 compared to 401,000 t in Q4 FY ’20.The sales were impacted by the second wave of Covid-19 and sporadic lockdowns. The company is currently operating at 60-65% capacity utilization level.
2.EBITDA/t shot up 58% y-o-y in Q4-The company registered INR 4,742 EBIDTA/t, marking a growth of 58% on an annual basis compared to INR 2,992 in Q4 FY ’20.
In FY ’21, the EBITDA/t stood at INR 6,787, up 132% against FY ’20.
3.Net debt down 80% y-o-y-In FY ’21, net debt declined 80% y-o-y to INR 160 crore from INR 790 crore in FY ’20.Net debt declined on solid free cash flow generation.
4.Improvement in net working capital cycle-In FY ’21, the net working capital cycle improved from 25 to eight days on cash and carry model.
5.Strong operational cash flows-The company generated INR 980 crore operating cash flow in FY ’21 against INR 510 crore in FY ’20.
6.Improvement in ROCE and ROE-The return on capital employed (ROCE) jumped to 26.5% in FY ’21 from 18% in FY ’20 while the return on equity (ROE) stood at nearly 25% in FY ’21 compared to 21% in the year-ago period.
7.Value-added product expansion-In Q4 FY ’21, the value-added portfolio was assessed at 60% against 45% in Q4 FY ’20.
In FY ’21, contribution from value added products increased to 57% from 45% in FY ’20. Value-added products contribute 60% of total sales by de-commoditizing the product portfolio. The value added products with EBITDA stood over INR 4,000/t in Q4 FY ’21 compared to INR 2,000/t in Q1 FY ’21. The company achieved high margins in value-added products as the unorganized players suffered from raw material shortage.
8.Order book-APL Apollo has over 2,000 orders worth INR 400 crore to supply to private developers and contactors.
9.Focuses on market expansion-APL Apollo has started a capex to produce 500x500mm diameter structural tubes and colour coated tubes. Its expansion plans aim to focus in this area for the next 5-6 years.
Outlook-
APL Apollo sees good demand for the rest of FY ’22 as the market may open up in June or July. “We plan to continue to focus aggressively on strategies of value-addition, cost-control, innovations, new market creations and brand equity announcement and are confident of delivering a sustainable double-digit growth in the non-pandemic period,” said Anubhav Gupta, Chief Strategic Officer, APL Apollo Tubes Ltd.
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