APL Apollo Tubes Limited — Q3 FY26 earnings call

Call held 27 Jan 2026

Management summary

APL Apollo Tubes delivered a strong Q3 FY26 performance despite macro headwinds, driven by strategic pricing and brand leverage. The company achieved high capacity utilization and upgraded its volume growth and EBITDA per ton guidance, while aggressively pursuing capacity expansion to 8 million tons by FY28 and 10 million tons by 2030, aiming for a liability-free balance sheet and improved ROCE.

Highlights

  • 9-month sales volume increased 11% YoY, well within the 10-15% guidance range.

  • 9-month EBITDA per ton is above INR5,000, surpassing previous guidance.

  • Achieved 375,000 tons in December, implying an annual figure of 4.4 million tons, testing 90% utilization of 5 million ton capacity.

  • Upgraded sales volume growth guidance to 20% for 4QFY26 and FY27, with EBITDA guidance of almost INR5,500 per ton.

  • Balance sheet shows a surplus cash of INR5.6 billion, with a target of INR1,500 crores by Q4, aiming for a liability-free company.

  • ROCE, currently at 33%, is expected to expand to sub-40 levels.

Concerns

  • Q3 faced multiple headwinds, including a subdued macro construction ban in Delhi NCR and falling raw material prices.

  • Freight cost from Raipur increased, and the benefit of raw material in Raipur has stopped.

Key financials

2 periods

Headline

  • Sales Volume (Dec 2025)
    3,75,000 tons
  • Capacity Utilization (Dec 2025)
    90%
  • ROCE
    33%
  • Gross Debt (Dec 2025)
    ₹548 Cr

9M FY26

  • Sales Volume Growth
    11%
    YoY +11%
  • EBITDA per Ton
    ₹5,000

What they filed

Q1 FY27: revenue up 8.5%, net profit up 11.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,774 5,433 5,509 5,170 5,206 +9%5,982 +10%6,269 +14%5,607 +8%
EBITDA138 346 414 372 447 +224%472 +36%511 +23%411 +10%
Net profit54 217 293 237 302 +459%310 +43%354 +21%263 +11%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹1,500 Cr funded from internal cash flows
    • Capacity expansion to 8 million tons (4 greenfield projects: 2 East India, 1 South India, 1 West India)
    • Brownfield project in Raipur for value-added products
    • Debottlenecking (1 million ton expansion by replacing existing mills)
    • Greenfield + brownfield expansion (2 million tons) ₹1,300 Cr
    • Debottlenecking expansion (1 million ton) ₹200 Cr
    And at the same time, we are aggressively pursuing capacity expansion to 8 million tons from current 5 million tons in next 2 years, which is a mix of 4 greenfield projects; 2 being in East India, 1 in South India and 1 in West India, 1 being the brownfield project in Raipur for value-added products. And very interestingly, we identified a 1 million ton expansion through debottlenecking, wherein we identified existing mills that could be replaced with much faster, modernized mills, which will expand our ROCE to the next level because the investment there will be very, very minimal. So total investment to expand our capacity from 5 million to 8 million tons is around INR1,500 crores, and this will be funded from internal cash flows over the next 2 years. ... So this put together will add 2 million tons over 5 million tons. And 1 million tons again, through debottlenecking, we are going to increase. And the greenfield plus brownfield expansion will require INR1,300 crores, and debottlenecking expansion will require INR200 crores.
  • Debt Gross ₹548 Cr
    On cash flow generation, you can see that our balance sheet shows a surplus cash of INR5.6 billion. ... A debt-free company we began 2 years ago, we are now on the verge of becoming a liability-free company. ... if you see like the debt we have on the books, right, the gross debt, let's not talk about the net debt. If we talk about the gross debt, on March '25, it used to be around INR600 crores, INR615 crores, okay, March '25. And 9 months, we closed at INR548 crores, okay? That's the gross debt on the books. So, because there was interest rate movement during the year, this is what it is, and charges because of bill discounting, etcetera, we do. So some increase in interest cost because of that. ... So, as we are going to have a lot of cash flow generation during quarter 4, I mean, from quarter 1 FY '27 onwards, this interest rate will drastically reduce to almost zero levels.
  • M&A Various global companies Joint venture · Announced

    To offer products in specialized segments like EV category, aerospace, petrochem, oil and gas, and heavy engineering, and to fast-track entry into super-specialty products.

    Aims for EBITDA spreads of INR10,000 to INR15,000 per ton in specialty tubes.

    This incremental 2 million tons will be in the super specialty segment, wherein we are identifying various targets worldwide for the JVs with Japanese, Korean, and European and American companies to offer products in specialized segments like EV category, aerospace, petrochem, oil and gas, and heavy engineering. We are already talking to a few targets. So over the next 12 months, there will be much more coming from our side. ... Because super-specialty products, now, if we build this capacity in-house in India, it will take time. So a partnership with a global player always put things on fast track, and we can capture pretty quickly.
  • Liquidity Cash ₹560 Cr Balance sheet shows surplus cash, with a target to reach INR1,500 crores by Q4, aiming to match current liabilities and become liability-free.
    On cash flow generation, you can see that our balance sheet shows a surplus cash of INR5.6 billion. ... And with the strong Q4, our surplus cash on the balance sheet could be INR1,500 crores, which was always the target that we would have as much cash on our books to match our current liabilities, so that we can be a liability-free company.

Guidance & targets

Volume

  • Sales Volume Growth Volume · 4QFY26 · High confidence 20%
    Hence, we are upgrading our sales volume growth guidance of 20% for 4QFY26 and FY27, with the EBITDA guidance of almost INR5,500 per ton.

    — Anubhav Gupta

  • Sales Volume Growth Volume · FY27 · High confidence 20%

    — Anubhav Gupta

  • Sales Volume Volume · FY26 · High confidence around 3.55 million tons
    So, rightly you can say that this year we will do around 3.55 million tons, which we are targeting in Q4 between 10-11 lakh tons.

    — Management

  • Sales Volume Volume · Q4 FY26 · High confidence 10-11 lakh tons (1.025-1.05 million tons)
    So, rightly you can say that this year we will do around 3.55 million tons, which we are targeting in Q4 between 10-11 lakh tons. You can say 10.25 or 10.5, we can easily achieve.

    — Management

  • Sales Volume Volume · FY27 · High confidence minimum 4.2 million tons
    Now I can confirm that 4.2 million ton plus I will do and INR5,500 ton EBITDA I will surely make it.

    — Sanjay Gupta

  • Volume Growth Volume · FY28 · High confidence 20%
    And as far as the volume growth for FY'28, so the guidance is that we should continue -- 20%, we should maintain 20% growth rate for FY'27 and FY'28.

    — Anubhav Gupta

Margin

  • EBITDA per Ton Margin · FY27 · High confidence almost INR5,500 per ton

    Previously INR4,800 to INR5,000 per ton → almost INR5,500 per ton

    Hence, we are upgrading our sales volume growth guidance of 20% for 4QFY26 and FY27, with the EBITDA guidance of almost INR5,500 per ton.

    — Anubhav Gupta

  • EBITDA per Ton (Specialty Tubes) Margin · future · Medium confidence INR10,000 to INR15,000 per ton
    So, if you look at the specialty tubes, some of the Indian companies are present and some of the global companies, which we are studying, the EBITDA spreads are in the range of INR10,000 to INR15,000 per ton.

    — Anubhav Gupta

  • EBITDA per Ton (Specialty Tubes) Margin · future · High confidence above INR10,000 per ton
    And -- but yes, whatever we do, it should be above INR10,000 per ton EBITDA.

    — Anubhav Gupta

  • EBITDA per Ton Margin · FY27 · High confidence minimum INR5,500 per ton
    Now I can confirm that 4.2 million ton plus I will do and INR5,500 ton EBITDA I will surely make it.

    — Sanjay Gupta

Capacity

  • Total Capacity Capacity · FY28 · High confidence 8 million tons

    From 5 million tons today

    So 8 million tons of structural steel tube capacity by FY '28, and overall 10 million tons of steel tube capacity by 2030.

    — Anubhav Gupta

  • Total Capacity Capacity · 2030 · High confidence 10 million tons

    — Anubhav Gupta

  • Exit Capacity Capacity · FY26 · High confidence 6 million tons

    From 5 million tons today

    So, FY '26, the exit capacity will be 6 million tons.

    — Anubhav Gupta

  • Capacity Capacity · FY27 · High confidence 6-6.5 million tons
    Now exact number, you can assume like 6 -- 6.5 million tons would be -- 6 million tons, 6.25 million tons would be as of FY '27 and 8 million ton by FY '28.

    — Anubhav Gupta

Profitability

  • ROCE Profitability · future · Medium confidence sub-40 levels

    From 33% today

    And with such high inventory churn and better EBITDA spreads and volume growth, our ROCE, which right now stands at 33%, it would also further expand to sub-40 levels.

    — Anubhav Gupta

  • ROCE Profitability · FY27 · High confidence 40%

    From 33% today

    It could hit 40%. ... 40% will be more. So optically, right, as on net INR5,000 crores.

    — Management

  • Total EBITDA Profitability · FY26 · High confidence cross INR1,900 crores

    Previously INR1,700 crores to INR1,800 crores → cross INR1,900 crores

    The first guideline, which I have given of INR1,700 crores this year and INR1,800 crores, there is no doubt. We are targeting that we should cross INR1,900 crores.

    — Sanjay Gupta

Liquidity

  • Surplus Cash on Balance Sheet Liquidity · Q4 FY26 · High confidence INR1,500 crores

    From INR5.6 billion (INR560 crores) today

    And with the strong Q4, our surplus cash on the balance sheet could be INR1,500 crores, which was always the target that we would have as much cash on our books to match our current liabilities, so that we can be a liability-free company.

    — Anubhav Gupta

Working Capital

  • Inventory Days Working Capital · future · High confidence 20-day range

    From 30-plus days today

    So we are seeing a lot of opportunities to rationalize the inventory days, which right now is 30-plus. It will be in our 20-day range.

    — Anubhav Gupta

  • Working Capital Working Capital · future · High confidence negative

    From 3 (unspecified unit) today

    That's right, Bharat bhai. So the working capital, which right now stands at 3, will go to negative.

    — Sanjay Gupta

Shareholder Returns

  • Dividend Payout Policy Shareholder Returns · future · High confidence minimum 25%

    Previously minimum 20% → minimum 25%

    We're going to increase some dividend payout. Surely, no doubt. Like right now, we are we achieved our targets, but we are thinking. So right now, we are going with minimum 20% of dividend payout policy. We increased to 25% minimum.

    — Management

Tax

  • Tax Rate Tax · future (when Dubai and Raipur contributions peak) · Medium confidence around 20%
    So eventually, we expect our tax rate to be around 20%, when the contribution from both Dubai and Raipur will be at its peak.

    — Anubhav Gupta

What to watch in Q4 FY26

Sales Volume Growth (4QFY26)

next quarter (4QFY26 results)
Current 9-month sales volume increased 11% YoY
Target 20% growth for 4QFY26

Why it matters

Verifies the upgraded guidance and momentum in sales volume.

Hence, we are upgrading our sales volume growth guidance of 20% for 4QFY26 and FY27, with the EBITDA guidance of almost INR5,500 per ton.

Risks & concerns

  • Subdued macro construction ban in Delhi NCR and falling raw material prices

    medium

    Company faced these headwinds in Q3 FY26 but still delivered strong performance.

    Management acknowledged

  • Raw material price volatility

    low

    Raw material price increases are easily passed on to customers with a 5-8 day lag; only major swings (10% or more in a quarter) would be an issue, which is rare.

    Management downplayed

  • Competition adding capacity

    low

    The gap with the number two player is very large (APL Apollo at 4 lakh tons/month vs. competitor at 15,000-20,000 tons/month), so competitor additions won't significantly impact APL Apollo.

    Analyst downplayed

Q&A highlights

7 direct
20% volume growth guidance for FY27 and EBITDA per ton guidance increase Direct
We are upgrading our sales volume growth guidance of 20% for 4QFY26 and FY27, with the EBITDA guidance of almost INR5,500 per ton.

Confirms aggressive growth targets and margin expansion, driven by strategy of using multiple brands and cost controls.

Asked by Sneha Talreja

Strategic focus on profit pool growth versus volume growth Direct
But I think we use those levers, but objective clearly is to grow the profit growth. And I think that strategy, you're focusing on the profit pool. Perhaps is the most important strategy change that we have initiated in the last few quarters.

Highlights a strategic shift towards profit pool expansion rather than just volume, indicating a focus on value-added products and efficient operations.

Asked by Bharath Shah

Achieving liability-free status and working capital efficiency Direct
So the working capital, which right now stands at 3, will go to negative.

Confirms the company's strong focus on working capital management and debt reduction, aiming for a unique 'liability-free' status.

Asked by Bharath Shah

EBITDA target of INR3,000 crores plus in FY27 Partial
Right now, you are greedy, Bharat. Frankly you ask me we are thinking about 42 million ton this 4.2 million tons and above 5,500 we will done the complete work or to increase this number we need one or two quarters more. I will not speedily give the answer because nothing will happen to me the goodwill which I made in the last 20 years to become bad it will take only 1 minute like last year.

Analyst attempts to get a higher EBITDA target, but management is cautious, emphasizing commitment to current guidance (4.2M tons, INR5,500/ton EBITDA) and reputation.

Asked by Bharath Shah

Capacity expansion details and demand drivers Direct
So this 4.5 million tons to 5 million tons capacity, one is super heavy, we had added. So that got added, plus some capacity we added through debottlenecking only. So the team is working very, very aggressively, right, to identify that within the existing capacity, how we can increase our capacities by doing small, small improvements, like the mill has multiple components.

Clarifies how the 0.5 million ton capacity increase was achieved (super heavy + debottlenecking) and provides details on future greenfield/brownfield projects.

Asked by Aditya Walekar

Specialty tube EBITDA per ton and JV strategy Direct
So, if you look at the specialty tubes, some of the Indian companies are present and some of the global companies, which we are studying, the EBITDA spreads are in the range of INR10,000 to INR15,000 per ton. It will depend on what kind of product segment we get into. It's a bit early to comment. ... Because super-specialty products, now, if we build this capacity in-house in India, it will take time. So a partnership with a global player always put things on fast track, and we can capture pretty quickly.

Reveals the high-margin potential of specialty tubes and the strategic intent to pursue JVs with global players to fast-track entry into this segment.

Asked by Omkar Ghugardare

Impact of new safeguard duty on APL Apollo Direct
No impact on Apollo, except the fact that our raw material prices went up, but that is fully passed on. So no impact as such.

Confirms the company's ability to pass on raw material price increases, mitigating the impact of external duties.

Asked by Prashant Sharma

Market share and competition with aggressive volume targets Direct
So, Kumar, 65% market share we've been maintaining for almost 4 years now after COVID. Before COVID, we were at 40%. Now, after COVID, from 2021 straight into '25, as we entered in '26, we are above 60%. Sanjay, do you want to add to this? Yes. And number two, Kumar, in our competition, I think the number two player, like we are talking 4 lakh tons per month. So, the number two player is at 15,000-20,000 tons per month. So, he will add the capacity. He will add 2,000, 4,000, and 5,000 tons. He will add 10,000 tons. It shouldn't make that much of a difference to us.

Addresses concerns about achieving high market share with aggressive volume targets, highlighting the significant gap with the next competitor and confidence in maintaining leadership.

Asked by Kumar Soumya

2 min read 6 chapters

Detailed narrative

Strong Q3 Performance Amidst Headwinds

APL Apollo Tubes reported a robust Q3 FY26, achieving a 9-month sales volume growth of 11% YoY and an EBITDA per ton above INR5,000, despite facing challenges like a construction ban in Delhi NCR and falling raw material prices. The company demonstrated strong operational efficiency, with December sales volume reaching 375,000 tons, annualizing to 4.4 million tons, and capacity utilization hitting nearly 90% on its 5 million ton capacity. This performance was attributed to strategic pricing and brand leverage.

Aggressive Capacity Expansion & Vision 2030

The company is aggressively expanding its capacity from the current 5 million tons to 8 million tons in the next two years, with a total investment of INR1,500 crores funded by internal cash flows. This includes four greenfield projects (two in East India, one in South India, one in West India) and one brownfield expansion in Raipur for value-added products. An additional 1 million tons will come from debottlenecking. The long-term vision is to reach 10 million tons of steel tube capacity by 2030, with the incremental 2 million tons focused on super specialty segments.

Enhanced Profitability and Cost Controls

APL Apollo has successfully expanded its EBITDA spreads, with APL Apollo-branded products commanding a premium of INR3,000-4,000 per ton and the SG brand contributing INR1,500-2,000 per ton. Strategic cost control measures, including significant reductions in fixed costs (INR300-400, likely per ton), freight costs (INR100-200 per ton), and electricity consumption (from 92 units till October to 84 units in December), have contributed to the upgraded EBITDA guidance of almost INR5,500 per ton.

Focus on Financial Strength and Efficiency

The company is prioritizing a liability-free balance sheet, currently holding a surplus cash of INR5.6 billion (INR560 crores), with a target to reach INR1,500 crores by Q4 FY26. Efforts are underway to rationalize inventory days from over 30 to a 20-day range, which will further improve cash flow. The Return on Capital Employed (ROCE) is expected to expand from 33% to sub-40 levels, reflecting improved capital efficiency and a strong financial position.

Upgraded Guidance and Market Strategy

APL Apollo has upgraded its sales volume growth guidance to 20% for both 4QFY26 and FY27, alongside the improved EBITDA per ton guidance of almost INR5,500. The company's strategy involves leveraging its dual-brand approach (premium APL Apollo and base category SG brand) to capture market share effectively. Management expressed confidence in achieving these targets, citing a significant competitive advantage over the next largest player.

Specialty Tubes and Global Partnerships

The company is exploring high-margin specialty tube segments, which offer EBITDA spreads of INR10,000-15,000 per ton. To accelerate entry into these specialized areas (e.g., EV, aerospace, petrochem, oil and gas, heavy engineering), APL Apollo is actively seeking joint ventures with Japanese, Korean, European, and American companies. The management expects to provide more clarity on these global partnerships and specific segments within the next 2-3 quarters.

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