Any current/future new fundraising through debt or equity?

No specific mention of new fundraising through debt or equity in the current transcript. Sanjay Gupta mentioned that for expansion to 5 million tons, there are essentially zero outflows for CAPEX in the near term (around Rs. 500 crores planned). Existing non-core assets may be deleveraged to manage liabilities. The company aims to maintain a net cash position, targeting Rs. 1,000 crores plus net cash this year. Current liabilities on the balance sheet (~Rs. 1,900 crores) may be reduced through negotiations with steel plants or alternative means. Overall, focus is on organic capacity expansion

Future growth expectations in earnings/operating earnings/profits/EPS?

APL Apollo targets a volume CAGR of around 20%-25% in the near future, aiming to reach 5 million tons capacity by FY26. EBITDA growth was 17% in FY24, with management confident in continued improvement post the correction period. Operating Cash Flow to EBITDA ratio has been above 90%, indicating strong cash generation. The company expects earnings to regain momentum after a slow Q1 2024 due to election-period caution, anticipating improved performance from Q2 onwards. Management targets Rs. 10,000 EBITDA per ton at 10 million tons capacity, with potential to achieve Rs. 5,500+ EBITDA per ton a

Current/ Expected Orderbook/ Pending Orders?

Post-elections, Apollo expects a strong recovery in retail construction demand and private builder order books. Many projects where Apollo’s designs and products are approved are anticipated to contribute to growth. The infrastructure sector is also expected to provide significant opportunities for structural steel tubes. The company foresees a construction boom supported by record presales from real-estate developers. The total addressable market for structural steel tubes is expected to be multiple times larger than other construction materials, supporting volume growth. Demand headwinds dur

Future growth expectations in sales/revenue/volumes?

Target to achieve 5 million tons capacity by FY26, with volume CAGR of 20%-25% in next few years. FY24 volume was 2.62 million tons, short of 3 million tons guidance due to macro and operational factors. Strong confidence that post-election period Q2 onwards demand and margins will improve. Volume growth focus supported by ramp-up of Raipur and Dubai plants, increasing capacity to 4.5 million tons by June FY25. Product mix shifting towards heavier and super heavy sections to capture emerging demand. International business projected to grow to 200,000-250,000 tons by FY25. Net cash position and

Any current/future capex/capital investment/strategic investment?

APL Apollo Tubes undertook the biggest CAPEX of its lifetime with around Rs. 2,500 crores over 2 years, including Rs. 1,700-1,800 crores combined for Raipur and Dubai plants and Rs. 600-700 crores for other plants to enhance capacity and value addition. Current CAPEX outflow is approximately Rs. 500 crores to reach 5 million ton capacity, with infrastructure largely in place. Additional CAPEX of around Rs. 2,500 to Rs. 3,000 crores is planned for expanding from 5 million ton to 10 million ton capacity. The company closed liabilities of about Rs. 1,900 crores in its books and aims to generate p

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APL Apollo Tubes LtdQ1 FY24Industrial Products

APL Apollo Tubes Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹1,818P/E: 43.6Market Cap: ₹52.5K CrSector: Industrial Products

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Order

Yes

Capex

Yes

2 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Target to achieve 5 million tons capacity by FY26, with volume CAGR of 20%-25% in next few years.
→FY24 volume was 2.62 million tons, short of 3 million tons guidance due to macro and operational factors.
→Strong confidence that post-election period Q2 onwards demand and margins will improve.
→Volume growth focus supported by ramp-up of Raipur and Dubai plants, increasing capacity to 4.5 million tons by June FY25.
→Product mix shifting towards heavier and super heavy sections to capture emerging demand.
→International business projected to grow to 200,000-250,000 tons by FY25.
→Net cash position and low future CAPEX intensity expected to support cash flow and expansion sustainably.
→Expecting to maintain/upscale EBITDA per ton margin alongside volume growth by capitalizing on steel price normalization and improved supply.
→Long-term ambition: 10 million tons capacity with Rs. 10,000 per ton EBITDA.

Margin guidance

Category 3

→APL Apollo targets a volume CAGR of around 20%-25% in the near future, aiming to reach 5 million tons capacity by FY26.
→EBITDA growth was 17% in FY24, with management confident in continued improvement post the correction period.
→Operating Cash Flow to EBITDA ratio has been above 90%, indicating strong cash generation.
→The company expects earnings to regain momentum after a slow Q1 2024 due to election-period caution, anticipating improved performance from Q2 onwards.
→Management targets Rs. 10,000 EBITDA per ton at 10 million tons capacity, with potential to achieve Rs. 5,500+ EBITDA per ton at 5 million tons.
→They plan net cash generation of Rs. 1,000+ crore this year, aiming to deleverage liabilities (~Rs. 1,900 crore).
→Long-term focus includes premiumization of product mix (targeting 70%-75% value-added sales by 5 million tons) and sustained ROCE improvement.
→Overall, management is optimistic about strong volume and earnings growth fueled by capacity expansions and steel sector tailwinds.

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Fundraise plans

→No specific mention of new fundraising through debt or equity in the current transcript.
→Sanjay Gupta mentioned that for expansion to 5 million tons, there are essentially zero outflows for CAPEX in the near term (around Rs. 500 crores planned).
→Existing non-core assets may be deleveraged to manage liabilities.
→The company aims to maintain a net cash position, targeting Rs. 1,000 crores plus net cash this year.
→Current liabilities on the balance sheet (~Rs. 1,900 crores) may be reduced through negotiations with steel plants or alternative means.
→Overall, focus is on organic capacity expansion and cash flow management rather than raising new funds through debt or equity.

Order book

Yes

→Post-elections, Apollo expects a strong recovery in retail construction demand and private builder order books.
→Many projects where Apollo’s designs and products are approved are anticipated to contribute to growth.
→The infrastructure sector is also expected to provide significant opportunities for structural steel tubes.
→The company foresees a construction boom supported by record presales from real-estate developers.
→The total addressable market for structural steel tubes is expected to be multiple times larger than other construction materials, supporting volume growth.
→Demand headwinds during the election period are expected to ease post-elections, enabling better order flow and volume growth.

Capex plans

Yes

→APL Apollo Tubes undertook the biggest CAPEX of its lifetime with around Rs. 2,500 crores over 2 years, including Rs. 1,700-1,800 crores combined for Raipur and Dubai plants and Rs. 600-700 crores for other plants to enhance capacity and value addition.
→Current CAPEX outflow is approximately Rs. 500 crores to reach 5 million ton capacity, with infrastructure largely in place.
→Additional CAPEX of around Rs. 2,500 to Rs. 3,000 crores is planned for expanding from 5 million ton to 10 million ton capacity.
→The company closed liabilities of about Rs. 1,900 crores in its books and aims to generate positive net cash flow this year.
→The focus is on capacity ramp-up, value-added segments, and premium products to achieve 10 million ton capacity with Rs. 10,000 per ton EBITDA target.
→Strategic investment includes expanding heavy and super heavy sections to stay ahead in the market.

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