APLAPOLLO - APL Apollo Tubes Limited Share Price

Question 1: Did we hear it correctly that you said 20% volume growth in Q4 and FY '27? What's changed with the increase in EBITDA guidance?

Answer: Yes, we are guiding for a 20% volume growth for both Q4 FY '26 and FY '27 due to our successful strategy implementation and increased brand positioning. Regarding EBITDA, we have observed fixed cost reductions and improved product mix. For instance, our monthly sales have consistently risen from 2.5 lakh tons in October to 3.7 lakh tons in December. This growth, combined with reduced freight costs and enhanced operational efficiency, supports our revised guidance of INR 5,500 per ton.

Question 2: How are you strategically focusing on the overall growth of the profit pool?

Answer: Our strategy is segmented by focusing on various product lines and optimizing production across our plants. Each plant is tasked with specific products to enhance efficiency, which reduces inventory costs and working capital needs. We target around 375,000 tons monthly, with Apollo aiming for INR 7,000 EBITDA per ton. This focused approach has led to enhanced margins and volume growth, with the aim of maintaining profitability even amidst fluctuating raw material prices.

Question 3: Is it possible to see EBITDA of INR 3,000 crores plus in FY '27?

Answer: Right now, that sounds ambitious. Our immediate target is 4.2 million tons with an EBITDA of INR 5,500 per ton, which should provide a clearer picture of our profitability. While we have a long-term vision of reaching 10 million tons capacity with higher EBITDA, any increase in guidance will depend on market stability and operational execution, ensuring critical reviews before committing to forecasts.

Question 4: Will the Dubai facility lead to a lower consolidated tax rate going forward?

Answer: Yes, both the Dubai and Raipur plants offer tax benefits. We expect the tax rate to stabilize around 20% eventually, which reflects the reduced rates from our start-up initiatives in these regions. As these facilities ramp up production, their contributions to earnings will help in lowering our overall effective tax rate.

Question 5: What HRC prices are you working for when targeting the INR 5,500 per ton EBITDA?

Answer: HRC is treated as a pass-through; we adjust our pricing based on the current market price, so there's no embedded assumption in our guidance regarding HRC pricing. We ensure any increases or decreases are factored into customer pricing promptly, maintaining a minimal lag of about 5-8 days in our pricing adjustments.

Question 6: Can you give insights into the demand drivers for your expanded capacity?

Answer: Demand is more than adequate, driven by governmental infrastructure spending and steady recovery in the construction sector. We're positioning ourselves uniquely to capture this growth by focusing on new regions and product categories absent from our current market presence. The targeted expansions will cater to segments with high growth potential, including structural and specialized applications.