Tag Economic Growth

APL Apollo Tubes Ltd: Record-High Q3 FY24 Earnings
APL Apollo Tubes Ltd: Record-High Q3 FY24 Earnings and Revenue Growth

APL Apollo Tubes Ltd: Overview 

APL Apollo Tubes Limited is India’s leading manufacturer of structural steel tubes and pipes, offering a wide range of innovative and high-quality products such as hollow sections, pre-galvanized tubes, galvanized pipes, and coated tubes. The company operates through an extensive distribution network, supported by state-of-the-art manufacturing facilities across the country. With a focus on providing cost-effective and sustainable solutions, APL Apollo serves diverse sectors, including construction, infrastructure, automotive, and industrial applications. The company has positioned itself as a market leader by prioritizing technological advancements, operational efficiency, and customer-centricity, enabling it to set benchmarks in the industry. The structural steel tube and pipe industry in India is poised for robust growth, driven by increased investments in infrastructure development, urbanization, and government initiatives such as “Make in India” and “Housing for All.” Rising demand from sectors like construction, real estate, and renewable energy further supports the positive outlook. The shift toward lightweight and durable materials is boosting the adoption of structural steel tubes over traditional construction materials. APL Apollo, with its innovative product portfolio and focus on capacity expansion, is well-positioned to capitalize on these trends. Moreover, the industry’s emphasis on sustainability and recyclable materials aligns with APL Apollo’s vision, ensuring long-term growth opportunities in both domestic and international markets. 

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In this quarter of the prior fiscal year, APL Apollo Tubes reported a net profit of ₹166 crore, as disclosed in its regulatory filing. The company’s revenue from operations surged by 30%, reaching ₹5,432 crore, compared to ₹4,177 crore during the same period the previous year. The EBITDA margin for the reporting period stood at 6.4%, slightly lower than the 6.7% recorded in the corresponding period a year earlier. 

 EBITDA was supported by a sales volume of 828,000 tonnes in Q3FY25. This reflects a year-on-year growth of 37% and a quarter-on-quarter increase of 9%. The value-added product mix improved to 56% during this quarter, compared to 55% in Q2FY25. EBITDA per tonne was reported at ₹4,173, a 10% year-on-year decline but a substantial 129% growth quarter-on-quarter. Additionally, cash profit for the quarter was ₹2.7 billion, marking a 26% year-on-year increase and a 166% rise compared to the previous quarter. 

Interest expenses for the quarter were ₹368 million, showing a 29% year-on-year rise and a 1% increase quarter-on-quarter. The company’s net working capital days for the nine months ending FY25 increased to 2 days from 1 day in FY24. For the same period, the return on capital employed (ROCE) stood at 20.7%, and return on equity (ROE) was 16.4%, compared to 29.5% and 22.2%, respectively, in the prior fiscal year. 

Sanjay Gupta, Chairman of APL Apollo, remarked, “The Company has delivered its best-ever quarter, achieving record-high sales volume, EBITDA, and PAT. This impressive performance was achieved despite challenges such as a weak macroeconomic environment, subdued retail demand, and a slowdown in government infrastructure spending. For the first nine months of FY25, our volumes grew 19% year-on-year, significantly outpacing the overall industry growth rate.” 

Q3 FY24 Earnings 

  • Revenue of ₹5433 crore in Q3 FY24 up by 30% YoY from ₹4178 crore in Q3 FY24.  
  • EBITDA of ₹346 crore in this quarter at a margin of 6% compared to 7% in Q3 FY24. 
  • Profit of ₹217 crore in this quarter compared to a ₹166 crore profit in Q3 FY24. 
UltraTech Cement and Ambuja Cements
Future of Cement in India: Key Updates and 2025 Growth Outlook

The Indian cement industry is poised for growth in 2025, expecting improved sales realizations, higher margins, and accelerated demand. This optimism is largely fuelled by government infrastructure spending and the ongoing consolidation within the industry, driven by two major players: UltraTech Cement (part of the Aditya Birla Group) and Ambuja Cements (led by billionaire Gautam Adani). 

Key Developments in the Cement Sector: 

  • Acquisitions and Capacity Expansion: Both UltraTech Cement and Adani’s Ambuja Cements are making substantial investments to expand their market share. Together, they are acquiring over 50 million metric tons per annum (MTPA) capacity for approximately USD 4.5 billion. Adani Cement, which entered the sector relatively recently, has significantly expanded its footprint by acquiring several cement companies, including Saurashtra-based Sanghi Industries and Penna Industries, and a recent agreement to acquire CK Birla Group’s Orient Cement. With these acquisitions, Adani Cement crossed a 100 MTPA capacity, and plans are in place to reach 140 MTPA by FY28, nearly matching UltraTech Cement’s 156.66 MTPA capacity. 
  • Consolidation and Industry Leadership: The cement sector is seeing increased consolidation, with UltraTech Cement and Ambuja Cements collectively controlling a significant portion of India’s cement production capacity. In fact, the top five cement producers now account for approximately 60–65% of the industry’s total capacity. UltraTech Cement, aiming to maintain its lead, plans to reach 200 MTPA capacity by FY27, underscoring its aggressive growth strategy. 

Industry Challenges and Trends in 2024: 

  • Declining Cement Prices: The first half of FY25 saw a 10% year-on-year decline in cement prices, with the average price dropping from Rs 365 per bag in FY24 to Rs 330 per bag. This price drop reflects challenges within the industry, including moderate capacity utilization and lower sales realizations. Despite this, cement prices recovered on a month-to-month basis, rising by 2% in September 2024 compared to the previous month. 
  • Lower Growth in 2024: Cement industry growth in 2024 slowed to around 4.5–5.5%, compared to a more robust 10% growth in previous years. This slowdown was attributed to several factors: A prolonged heatwave and labour shortages during general elections. Seasonal monsoon disruptions that affected construction activity. 
  • Capacity Utilization and Volumes: Capacity utilization levels remained moderate at 70%, as several players struggled with underutilized capacity due to slow growth in demand and the impact of low cement prices. However, the industry’s outlook for the second half of FY25 is more optimistic, with expectations of a 4-5% increase in cement volumes driven by higher rural consumption, increased urban housing demand, and a boost in government infrastructure spending. 

Outlook for 2025 and Beyond: 

  • Government Infrastructure Push: A significant boost to the sector is expected from the government’s increased expenditure on infrastructure projects. This is anticipated to drive a rise in cement demand, especially in the housing and rural sectors. The industry’s growth is also being supported by higher capital expenditure from both the government and private sector players, which is likely to result in greater cement consumption. 
  • Capacity Additions and Expected Growth: The Indian cement industry is adding 35 MTPA of capacity in FY25, with an additional 70-75 MTPA capacity expected to come online in FY25-26. Despite this, overall capacity utilization is expected to remain moderate at 70% due to a lag in demand catching up with supply. The Cement Manufacturers’ Association (CMA) forecasts that cement volumes will grow by 4-5% year-on-year, reaching 445-450 million MT in FY25. 
  • Industry Transformation: The cement industry is undergoing a transformation, driven by a growing emphasis on sustainability, innovations, and increased demand for both housing and infrastructure. The Indian cement market, which now has a total capacity of 690 million tonnes, is expected to see improved price realizations and better capacity utilization in the coming years.