APLAPOLLO - APL Apollo Tubes Limited Share Price

In the earnings call on May 4, 2026, APL Apollo Tubes Limited management expressed cautious optimism about the company's outlook amid external challenges. They reported a 9% year-over-year increase in quarterly volumes and an EBITDA per ton exceeding INR 5,500. The company achieved a remarkable 37% return on capital employed for FY '26, with a net cash balance exceeding INR 15 billion.

Management acknowledged difficulties in predicting sales volumes due to recent geopolitical tensions impacting global and Indian economies. Key challenges included a steel supply shortage and reduced operational capacity in Dubai, which operated at 40% utilization. They also faced energy crises and labor shortages influencing production.

Despite these hurdles, management aims to safeguard profitability rather than solely focusing on volume growth. Their strategy includes enhancing margins while maintaining a long-term capacity target of 8 million tons by FY '28, backed by capex commitments of approximately INR 500-600 crores annually.

Forward-looking statements emphasized the company's unwavering commitment to its full-year targets. APL Apollo projects a volume growth guidance of 15-20% for FY '27, alongside EBITDA growth expectations of 20-25% and PAT growth of 25-30%. Management indicated plans for increased expenditures on branding and operational efficiencies, supporting a strategy to capture evolving market opportunities effectively.

Major Questions and Answers from the Q&A Section of the Earnings Transcript:

1. Sneha from Nuvama Wealth Management:
"Could you provide an update on galvanized tubes and operational levels?"

Anubhav Gupta:
"Domestic operations faced interruptions due to gas shortages in March, but conditions improved. Currently, we are operating at approximately 80%-85% capacity. If fully stable, production could increase by 15%-20%."

2. Sneha:
"Is the current weakness in demand due to actual slowdown or de-stocking? Any changes in guidance?"

Sanjay Gupta:
"It's tough to distinguish between de-stocking and demand slowdown at this time. While volumes may fluctuate, we focus on maintaining margins. Our yearly guidance remains unchanged, but we may need to adjust focus depending on market conditions."

3. Angad Saluja from UBS Securities India:
"How are we managing margins in the current scenario of volume volatility?"

Sanjay Gupta:
"We've reduced our volume in the Patra segment to less than 30%, which alleviates margin pressure. Increased margins in our galvanized and coated products are primarily due to market leadership and product innovation."

4. Angad Saluja:
"What is the expected capex for FY '27?"

Sanjay Gupta:
"We anticipate a capex of around INR 500-600 crores annually. Our total capex plan for achieving 8 million tons is about INR 1,400-1,500 crores, which will be completed in the next 2-2.5 years."

5. Vikas Singh from ICICI Securities:
"What's the sustainability of the INR 5,500 ton margin considering current market conditions?"

Sanjay Gupta:
"We believe the INR 5,000 to 5,500 margin is sustainable long-term. In the current environment, achieving INR 6,000+ may be challenging but feasible, depending on market conditions."

6. Vikas Singh:
"Will inventory gains impact margins with rising prices?"

Sanjay Gupta:
"Inventory is largely held at previous rates, and our free inventory is at 13-14 days. We aim to minimize raw material shortages by managing our inventory efficiently despite fluctuating steel prices."

7. Bharat Shah from BCS Capital Ideas:
"Can you confirm your volume and EBITDA growth guidance?"

Sanjay Gupta:
"We aim for 15%-20% volume growth, 20%-25% EBITDA growth, and 25%-30% PAT growth for FY '27, which remains contingent on market conditions but is our target."

8. Akshay from AK Investment:
"Will the share of infrastructure and commercial buildings increase over the next few years?"

Anubhav Gupta:
"We anticipate an improvement in infrastructure contribution as government spending ramps up, but housing will likely continue to dominate due to past slowdowns in infrastructure."

9. Onkar Gangurde:
"Given current conditions, how do you capitalize on gaining market share?"

Anubhav Gupta:
"With a strong financial position, we're working on capacity building and branding. Our market share improved from 55% to 65%, with ongoing capex in East India to enhance competitive positioning."

10. Devarshi Jani:
"What is the expected annual increment in capex to meet SBTI validation for emissions reduction?"

Anubhav Gupta:
"Investments in ESG compliance, such as renewable energy, streamline costs, often leading to lower manufacturing expenses rather than significant increases."

This summary captures the essence of the management's responses while adhering to the character limit and retaining essential details.