APL Apollo Tubes Q2 Results: Profit Jumps 35%, In Line With Estimates

The company's revenue rose 16.7% to Rs 4,630 crore, as against an estimate of Rs 4,699.2 crore, in Q2 FY24.

<div class="paragraphs"><p>APL Apollo makes structural tubes. (Photo:&nbsp;APL Apollo Tubes)</p></div>
APL Apollo makes structural tubes. (Photo: APL Apollo Tubes)

APL Apollo Tubes Ltd.'s second quarter profit rose, in line with analysts' estimates.

The structural tube manufacturer's net profit increased 35.1% year-on-year to Rs 203 crore in the quarter ended September, according to an exchange filing. That compares with the consensus estimate of Rs 212 crore of analysts tracked by Bloomberg.

APL Apollo Tubes Q2 FY24 Highlights (Consolidated, YoY)

  • Revenue up 16.7% at Rs 4,630 crore vs Rs 3,969 crore (Bloomberg estimate: Rs 4,699.2 crore).

  • Ebitda rises 40.2% to Rs 325 crore vs Rs 232 crore (Bloomberg estimate: Rs 331.98 crore).

  • Margin at 7% vs 5.8% (Bloomberg estimate: Rs 7.1%).

  • Reported profit up 35.1% at Rs 203 crore vs Rs 150 crore (Bloomberg estimate: Rs 212 crore).

The rise in revenue was driven by a 12% year-on-year growth in volume at 6,74,761 tonne. The company has given sales volume guidance of 2.8-3 million tonne for FY24.

The Ebitda per tonne rose 25% to Rs 4,817 per tonne. This was driven by a 55% surge in Ebitda per tonne for standard products, which accounted for 45% of overall volume.

Value-added products Ebitda per tonne also rose, increasing 14% YoY, aided by the ramp-up in its Raipur plant. The value-added products shares remained stable YoY at 55% and declined sequentially from 57% in Q1 of FY24. 

APL Apollo plans to 'de-commoditise' its product portfolio, with a target of achieving 70% share in value-added products by 2025.

Capacity Expansion

The management is targeting to increase its overall capacity to 5 million tonne in FY24 from the current 3.6 million tonne. This would include a brownfield expansion of 900 kilo tonne per annum and greenfield expansion of 500 ktpa. This higher capacity is expected to be utilised by FY26.

The company has already spent Rs 356.4 crore in the first half of FY24, as compared with the full-year capex target of Rs 500 crore to Rs 600 crore. The management aims to take its total capacity to 10 million tonne by 2030, after this expansion.

Raipur Plant Update

The company received Rs 500 crore incentives from Chhattisgarh for setting up its Raipur plant. The plant has an installed capacity of 1.2 million tonne, with scope to further expand it by 0.1 million tonne through debottlenecking.

The management aims to increase the plant's production to 175-200 kt by Q4 of FY24. This would imply annual production of 500-600 kt from the plant, with a capacity utilisation of 60–70%. The annual production from the plant is further expected to be ramped up 1 million tonne by FY25-FY26.

"The ramp-up of new Raipur plant is on expected lines. The sales mix will improve further in coming quarters, with rising contribution of innovative products," said Sanjay Gupta, chairman and managing director of the company.

Shares of APL Apollo closed 1.34% lower at Rs 1,602.1 apiece on Monday ahead of the results, as compared with a 0.49% gain in the NSE Nifty 50.