Synopsis: APL Apollo Tubes delivered robust Q2FY26 results with strong YoY and QoQ growth in sales, EBITDA, and net profit, maintained FY26 guidance, launched SG Premium for secondary markets, and plans to expand capacity to 10 million tons by FY31 with Rs. 1,500 crore capex.
This company is one of India’s leading branded steel products manufacturers and runs 10 manufacturing facilities churning out over 1,500 varieties of MS Black Pipes, Galvanised Tubes, Pre-Galvanised Tubes, Sand structural ERW Steel Tubes is now in the spotlight after posting strong Q2 results, maintains FY26 guidance, launches SG premium for secondary markets, plans capacity expansion to 10 million tons by FY31.
Q2 financial results
Quarter-on-Quarter (QoQ) Performance:
APL Apollo Tubes reported a marginal increase in sales for Q2FY26, rising 0.7% to Rs. 5,206 crore from Rs. 5,170 crore in the previous quarter. EBITDA improved by 20.1%, reaching Rs. 447 crore compared to Rs. 372 crore in Q1FY26.
Net profit rose 27.4% to Rs. 302 crore, up from Rs. 237 crore in the preceding quarter. Consequently, the earnings per share (EPS) increased to Rs. 10.86 from Rs. 8.55 in Q1, reflecting the strong improvement in profitability.
Year-on-Year (YoY) Performance:
On a YoY basis, the company demonstrated robust growth across all key metrics. Sales grew 9.1% from Rs. 4,774 crore in Q2FY25 to Rs. 5,206 crore. EBITDA surged 223.9% to Rs. 447 crore from Rs. 138 crore, while net profit skyrocketed 461.1% to Rs. 302 crore from Rs. 53.8 crore in the same period last year. EPS also saw a substantial rise of 460.8%, increasing to Rs. 10.86 from Rs. 1.94 in Q2FY25
APL Apollo Tubes reported strong operational and financial performance in Q2 FY2025, with sales volume at 855k tons, up 13% YoY and 8% QoQ, generating revenue of Rs. 52.1 billion, a 9% YoY and 1% QoQ increase
Value-added sales contributed 57% of the mix, and cash profit increased 257% YoY and 23% QoQ to Rs. 3.6 billion. Net working capital remained at zero days, with net cash at Rs. 5.1 billion versus Rs. 3.1 billion in FY25. Return ratios were strong, with ROE at 24.4% up from 19.4% and ROCE at 32.4% up from 24.5%.
Capacity expansion plan by FY28
The company plans to expand its total capacity to 6.8 million tons by FY28, driven by a mix of brownfield and greenfield projects and new speciality tube production.
Key expansions include Gorakhpur (2,00,000 tons), Kolkata (3,00,000 tons), Bhuj (300,000 tons), New Malur (3,60,000 tons), Dubai (2,00,000 tons), and Raipur for roofing sheets (5,00,000 tons) and heavy products (1,00,000 tons), alongside shifting existing lines (1,60,000 tons). The speciality tubes will cater to structural, oil & gas, water, and mechanical sectors. The planned capex over the next three years is Rs 15 billion.
Stock Price Performance and Shareholding Pattern
With market capitalization of Rs. 47,732 cr, the shares of APL Apollo Tubes Ltd are closed at Rs. 1,719 per share, from its previous close of Rs. 1,737 per share.
The stock has delivered a 408% return over the past five years, with 17% growth in the last year and 9% year-to-date. However, it posted a 6% decline over the past six months and fell 1.5% in the last month.
Promoter holding stayed almost flat at 28.30%. FII’s holding slightly increased from 33.05% in Q1FY26 to 33.72% in Q2FY26. DII’s rose to 18.92% from 16.83%. Public holding fell from 21.81% to 19.07% over the same period.
Secondary Market Strategy: SG Premium Launch
To protect its channel share without impacting its flagship APL Apollo brand, the company launched SG Premium as a flanker brand targeting secondary-grade markets. Current volumes are 10–15 kt/month, with economics around break-even to slightly negative (up to Rs. 500/ton), helping utilize spare capacity.
Price points are set at Rs. 49,000–49,500/ton for SG Premium, compared to Rs. 54,000/ton for APL Apollo. By offering both brands through the same dealers, the strategy allows dealers to compete in secondary markets while enabling APL to optimize plant utilization and reduce unit costs.
Guidance
The company has maintained its FY26 guidance of 10–15% volume growth with an EBITDA spread of Rs. 4,600–5,000/ton, noting that H2 is typically stronger and upside is possible if GDP exceeds expectations.
Management emphasized a shift toward profitability over volume, targeting nearly Rs. 1,700 crore EBITDA for FY26, with Q3 and Q4 each expected to exceed Rs. 450 crore.
Capacity Utilization, and Expansion Plans
The company’s current production capacity stands at close to 5 million tons, with FY26 planned throughput of ~3.5 million tons, implying a utilization rate of around 70%. Utilization trends show improvement, with the Raipur plant rising from ~55% in Q1 to ~65–70% in Q2, and the Dubai plant increasing from ~65% to ~80–85% over the same period.
Management plans to add 7 million tons of capacity over the next 2–3 years, including expansions in the Middle East (1 million tons, with a new Abu Dhabi plant), India East (Gorakhpur 0.2 mtpa, Siliguri 0.3 mtpa), and Raipur (1.5 mtpa total, combining ABPL 1.2 mtpa and legacy 0.3 mtpa). The Dubai plant, currently at 0.3 mtpa, will expand to 0.5 mtpa with two new lines starting in November and March, already fully booked.
The company aims to reach 10 million tons over five years, leveraging outsourcing and incremental capacity once throughput crosses 5 million tons. The planned Rs. 1,500 crore expansion capex will be funded entirely from internal cash flows, with operating cash flow to EBITDA conversion exceeding 90%.
Written by Manideep Appana
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