APL Apollo Tubes Limited — Q4 FY26 earnings call

Call held 4 May 2026

Management summary

APL Apollo Tubes delivered strong Q4 FY26 results, with robust volume growth and EBITDA per ton, despite significant headwinds from raw material shortages, global crises, and domestic operational challenges. The company maintained a focus on profitability and margins, achieving a 37% ROCE and a healthy net cash position. Management outlined plans for continued capacity expansion and shareholder returns post-debt reduction.

Highlights

  • 9% increase in quarterly volume on Y-o-Y basis.

  • EBITDA per ton upward of INR 5,500 for Q4 FY26.

  • 37% ROCE for the full year FY26.

  • Negative working capital cycle for the full year.

  • Operating cash flow generation of INR 2,000 crores and free cash flow generation of INR 1,300 crores for the full year.

  • Closed the year with net cash balance of INR 1,500 crores plus.

Concerns

  • Shortage of raw material steel from Indian mills and global supply chain disruption.

  • Dubai operations operating at 40% utilization due to ongoing crisis.

  • Fear of price correction in raw material prices leading to de-stocking from channel partners.

  • Energy crisis in India and labor shortage due to heat and elections impacted March volumes and operations.

Key financials

  1. Quarterly Volume Growth 9% +9%YoY
  2. EBITDA per ton ₹5,500
  3. ROCE 37%
  4. Operating Cash Flow ₹2,000 Cr
  5. Free Cash Flow ₹1,300 Cr
  6. Net Cash Balance ₹1,500 Cr

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 ₹500 Cr fully funded from internal cash flows
    • Total pending plan for 8 million tons capacity ₹1,400 Cr
    So our target remains the same, around INR500 crores, INR600 crores yearly capex. Our total capex plan which is pending right now for 8 million ton is around INR1,400 crores, INR1,500 crores our total pending plan is 8 million tons. We will complete it in the next 2 and 2.5 years for 8 million tons.
  • Debt Net ₹500 Cr
    I think my net liabilities are around INR500 crores as of today.
  • Liquidity Cash ₹1,500 Cr Closed the year with net cash balance of INR15 billion plus in the books.
    And we closed the year with net cash balance of INR15 billion plus in the books.

Guidance & targets

Volume

  • Volume Growth Volume · FY27 · Medium confidence 15% to 20%
    Bharat bhai, I tell to the last call, 15% to 20% growth and 20% to 25% EBITDA growth and 25% to 30% PAT growth.

    — Sanjay Gupta

  • Volume Growth (minimum) Volume · FY27 · High confidence 15%
    Yes. Volume. I think 20% is difficult. If it gets worse than we targeting 15%.

    — Sanjay Gupta

  • May Volume Volume · May 2026 · Medium confidence 2.75-3 lakh tons
    thinking what is achievable 2.5 we have done in April, 2.75-3 lakh will be doing in May, 3 plus to 3.25 in June, so we can touch 8.75.

    — Sanjay Gupta

  • June Volume Volume · June 2026 · Medium confidence 3.5 lakh tons
    So I think, May we can do 3 lakh ton and June we are back on track with 3.5 lakh ton.

    — Sanjay Gupta

  • Full Year Volume Volume · FY27 · Medium confidence 8.75 lakh tons

    From 7.92 lakh tons today

    Last year, we have done 7.92 lakh tons. As per our thinking what is achievable 2.5 we have done in April, 2.75-3 lakh will be doing in May, 3 plus to 3.25 in June, so we can touch 8.75. So it will be more than 8, we can touch 8.75.

    — Sanjay Gupta

EBITDA

  • EBITDA Growth EBITDA · FY27 · High confidence 20% to 25%
    Bharat bhai, I tell to the last call, 15% to 20% growth and 20% to 25% EBITDA growth and 25% to 30% PAT growth.

    — Sanjay Gupta

PAT

  • PAT Growth PAT · FY27 · High confidence 25% to 30%
    Bharat bhai, I tell to the last call, 15% to 20% growth and 20% to 25% EBITDA growth and 25% to 30% PAT growth.

    — Sanjay Gupta

Capacity

  • Total Capacity Capacity · by FY '28 · High confidence 8 million tons
    And our long-term plan of 8-million-ton capacity by FY '28 remains totally on-track.

    — Anubhav Gupta

EBITDA per ton

  • EBITDA per ton (long-term) EBITDA per ton · long term · High confidence INR 5,000 to INR 5,500
    First, you say from INR5000 to INR5500 per ton, I think this on a long term basis.

    — Sanjay Gupta

ROCE

  • ROCE ROCE · FY27 · Medium confidence higher than 40%+
    Yes, it is really remarkable and 40% plus ROCE which I think will go even higher in the fiscal '27

    — Bharat Shah

What to watch in Q1 FY27

Net Liabilities Reduction

Q1 and Q2 FY27
Current INR 500 crores
Target Eliminated

Why it matters

Elimination of liabilities is a precursor to potential increased shareholder returns.

I have a liability of INR500 crores. Once I eliminate this liability in Q1 and Q2, I'm unsure what to do with the cash.

Risks & concerns

  • Raw material steel shortage and global supply chain disruption

    high

    Shortage of steel from Indian mills and global supply chain disruption impacted operations.

    Management acknowledged

  • Low utilization at Dubai operations

    high

    Dubai operations are running at 40% utilization due to ongoing crisis.

    Management acknowledged

  • Worsening geopolitical/economic situation

    high

    If conditions worsen significantly (e.g., fuel shortage for vehicles), the business plan might need reconsideration.

    Management acknowledged

  • Fear of price correction in raw material prices

    medium

    Steel prices rose significantly, leading to de-stocking from channel partners.

    Management acknowledged

  • Energy crisis and labor shortage in India

    medium

    Energy crisis and labor shortage due to heat/elections impacted March volumes and construction sites.

    Management acknowledged

  • Difficulty in predicting sales volume

    medium

    The changing environment makes month-on-month volume prediction challenging.

    Management acknowledged

Q&A highlights

8 direct
Sustainability of EBITDA per ton Direct
First, you say from INR5000 to INR5500 per ton, I think this on a long term basis. Yes, INR6000 plus that we trying in the current situation, will it sustain us or not, this I can't say anything right now. But INR5,000 to INR5,500, the 2 years of track record, the product price margin we have we are quite sure that now in the future, we continue with this margin.

Management clarified the long-term sustainable EBITDA per ton range versus the current higher, situational levels.

Asked by Vikas Singh

Impact of inventory gains on margins Direct
Inventory, mean, the inventory is in the books, we a large scale. The maximum price increase was 1st April. 1st April, by almost INR4500. So the inventory we have in our books is still at the old rate. And we don't have much of that inventory either because -- if you see our balance sheet, are at almost 25 days. There's also scrap, stock in the branches, and pending orders from OEM and export. So, I can say that the free inventory we have is 13-14 days' worth of free inventory. So, what profit or loss will we incur from that.

Management explained that minimal free inventory and monthly price revisions limit significant inventory gains/losses, assuring margin quality.

Asked by Vikas Singh

Cash generation and capital allocation plans Direct
I think my net liabilities are around INR500 crores as of today. How much is left, Chetan? INR500 crores. I have a liability of INR500 crores. Once I eliminate this liability in Q1 and Q2, I'm unsure what to do with the cash. Either increase the dividend or do a buyback. I can say yes.

Management outlined a clear plan for surplus cash, indicating potential for increased shareholder returns after debt reduction.

Asked by Vikas Singh

Impact of war on Q4 performance and guidance Direct
So Darshan, see, I mean, during our quarter three call, we had guided for around near about 1 million ton of sales volume in quarter four with INR5,300-INR5,500 per ton EBITDA okay, for the full quarter. Till 28th Feb, we were pretty much on track to achieve these numbers. And when the crisis started, then this whole disruption started to hurt the operations in Middle East, in India because of gas shortage and then steel shortage and steel price hike. So yes, I mean, if war had not started, we would have met our guidance which we had given in the quarter three.

Management confirmed that the geopolitical crisis directly impacted Q4 performance, preventing them from meeting prior guidance.

Asked by Darshan Mehta

Market share gains from industry disruptions Direct
So Amit, which we did definitely like we have demonstrated this similar trends during COVID times. The industry leaders, the strong players, they always benefit from the like, disruption which impact the overall industry. So yes, I mean, it -- that's the resilience of our business model that we can manoeuvre our strategy based on the conditions which keep on coming and going. But yes, I mean, at the same time we wish that things become back to normal so that whatever guidance we have given for the full year, we are smoothly able to achieve that.

Management confirmed that disruptions allow stronger players like APL Apollo to gain market share and improve pricing power.

Asked by Amit Murarka

Volume outlook for May and June 2026 Direct
Yes. I think because there was a little problem with steel in April as well. I think that problem, the disruption that came, the steel problem is over. So we are now little bit aggressive in the market. So I think, May we can do 3 lakh ton and June we are back on track with 3.5 lakh ton.

Management provided specific volume targets for the upcoming months, indicating a recovery from April's muted performance.

Asked by Rajesh Ravi

Reasons for higher EBITDA/ton despite lower value-added sales mix Direct
So there were two reasons. Number one is the Apollo, APL Apollo brand premium, okay, which led to better pricing in general category. Okay. If you remember that we have, we had increased the pricing for Apollo general segment in January of 2025, okay, by almost INR1,500 per ton. So that increase, that price hike is straightaway coming to our EBITDA, okay, for the general product. That's why from INR2,000 per ton EBITDA level, we are at INR3,500 per ton plus level in general. So this is the main driver of the profitability. Okay. And second, yes, of course, cost rationalization steps we keep on taking 24/7. So some, some measures keep on delivering results.

Management clarified that brand premium and pricing power, along with cost rationalization, drove higher EBITDA/ton despite a shift in product mix.

Asked by Devarshi Jani

Impact of ESG/decarbonization on manufacturing costs Direct
No, in fact, whatever, I mean, whatever steps we take for better ESG compliance, it actually results in lower costs. For example, you, you invest into renewable energy, right, that brings down your overall cost per ton, power cost per ton, right? So, in fact, we are experiencing opposite, that you invest into ESG compliance, it actually end up yielding better results for you in terms of cost optimization.

Management clarified that ESG initiatives are cost-optimizing, not cost-adding, which is a positive signal for sustainability efforts.

Asked by Devarshi Jani

3 min read 7 chapters

Detailed narrative

Strong Financial Performance Despite Headwinds

APL Apollo Tubes delivered a robust Q4 FY26, with quarterly volume increasing 9% Y-o-Y and EBITDA per ton reaching upward of INR 5,500. The company achieved a 37% ROCE for the full year, maintained a negative working capital cycle, and generated INR 2,000 crores in operating cash flow and INR 1,300 crores in free cash flow. The year closed with a healthy net cash balance exceeding INR 1,500 crores, demonstrating strong financial resilience.

Operational Challenges and Strategic Response

The quarter was marked by significant challenges including raw material steel shortages, global supply chain disruptions, and the Middle East crisis impacting Dubai operations, which ran at 40% utilization. Domestically, operations faced temporary shutdowns for 10-15 days in March due to gas shortages and labor shortages from heat and elections. In response, management strategically shifted focus to protecting profitability and margins over pushing volumes, leveraging brand strength and product innovation.

Sustainable Margin Profile and Product Mix

Management asserted the long-term sustainability of an EBITDA per ton between INR 5,000-5,500, attributing current higher margins (INR 6,000+) to market leadership, product innovation, and temporary steel shortages. The company strategically reduced volume in the Patra segment to less than 30% to avoid margin pressure and saw improved margins in galvanized and coated products. A significant INR 1,500/ton price increase for the general segment in January 2025 also boosted profitability, driving general product EBITDA from INR 2,000/ton to over INR 3,500/ton.

Aggressive Capacity Expansion and Funding Strategy

The long-term plan to reach 8 million tons capacity by FY28 remains fully on track, with INR 1,400-1,500 crores of pending capex to be completed over the next 2-2.5 years. This expansion, including new plants in East India and a Bangalore plant (Malur 2) for lighter structures, is entirely funded through internal cash flows. This approach allows for significant growth without straining the balance sheet or requiring additional debt.

Cash Management and Shareholder Returns Outlook

The company's robust cash generation significantly outpaced its capex requirements. With net liabilities of approximately INR 500 crores expected to be eliminated in Q1/Q2 FY27, management indicated a strong likelihood of increasing dividends or initiating a share buyback thereafter. This commitment reflects a focus on returning capital to shareholders once financial obligations are cleared.

FY27 Guidance and Market Share Gains

Despite current headwinds, the company maintains its FY27 guidance of 15-20% volume growth (targeting 15% if conditions worsen), 20-25% EBITDA growth, and 25-30% PAT growth. Management believes industry disruptions benefit stronger players, enabling them to gain market share from unorganized competitors through strategic SKU management, branding efforts, and expanding distribution networks in new markets. Monthly volume targets for May and June are 2.75-3 lakh tons and 3.5 lakh tons respectively, aiming for 8.75 lakh tons for FY27.

ESG Initiatives Driving Cost Optimization

APL Apollo Tubes' commitment to ESG compliance, including SBTI validation, is viewed as a driver of efficiency rather than a cost burden. Investments in areas like renewable energy are expected to reduce overall power costs per ton, leading to cost optimization. This proactive approach to sustainability aligns with financial benefits, yielding better results in terms of operational costs.

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