Apollo Pipes

Apollo Pipes experienced a flat year-on-year consolidated sales volume in Q1 FY26, with a 4% decline on a console basis. This performance was attributed to significant headwinds in the PVC pipe industry, including weak end-user demand, heightened raw material price volatility, and a slowdown in both private real estate and government infrastructure spending. Consequently, margins were under pressure due to low capacity utilization and intense competition across the sector.

The company expanded its product range by adding PLB ducts, DWC pipes, PE gas pipes, PVC-O pipes, and foraying into UPVC doors and windows. These strategic additions aim to diversify into adjacent high-growth sectors and contribute 5-10% to overall revenue, supporting a long-term revenue growth target of 20-25%. A key focus is to increase CPVC contribution from the current 15% to over 20% in the next 1-2 years, leveraging a co-marketing agreement with a leading raw material supplier.

Apollo Pipes is strengthening its geographical presence with the steady ramp-up of its West India facility, which is playing a key role in catering to demand in the Western region. Additionally, a new plant in Varanasi is on track to commence operations in the coming months, which will significantly bolster the company's presence in the Eastern Indian market, targeting new construction infrastructure spends in that belt. The Kisan acquisition, now 15 months old, has seen supply chain and distribution network issues resolved, with improved realizations targeted from Rs. 4,000 to Rs. 7,000-Rs. 8,000 per ton.

The company incurred CAPEX of Rs. 70 crores in Q1 FY26, following Rs. 166 crores in FY25. It plans for an additional Rs. 70-80 crores in the next three quarters, with a residual Rs. 30-40 crores for FY26, to expand total installed capacity to 286,000 tons over two years without incurring new debt. The working capital cycle remained disciplined at 38 days, with a target to improve to 30 days by end of FY26 or H1 FY27, and a sustainable 25-30 days.

Management anticipates a more favorable demand environment from September onwards, post-monsoon, with increased government spending expected to boost liquidity. While competitive intensity remains high due to overcapacity and sluggish demand, leading to aggressive pricing, the company expects a 'cleanup' in the sector in a few quarters as smaller players struggle. This consolidation is projected to lead to a more rational pricing environment and improved margins, with ROCE targeted to exceed 20% in 2-3 years.

Apollo Pipes currently holds a market share of 2.5%-3% based on its current revenue run rate of Rs. 1,200-Rs. 1,300 crores against an industry size of Rs. 40,000-Rs. 45,000 crores. With its expanded capacity of 286,000 tons, the company aims to generate Rs. 3,000 crores in revenue, targeting a market share of 5% within 3-4 years. This growth will be supported by continuous product innovation and market penetration, aiming for a long-term revenue growth rate of 20-25%.