Apollo Pipes Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Apollo Pipes reported an 8% YoY consolidated sales volume growth in Q2 FY26 amidst a challenging demand environment and margin pressure. The company is actively executing a 4-pronged strategy focusing on product portfolio expansion, improving product mix (especially CPVC), and capacity ramp-up in West and East India. Management anticipates a stronger H2 FY26 driven by improving demand and potential anti-dumping duty imposition, aiming for 100,000 tons sales volume for the full year.

Highlights

  • Consolidated sales volume grew 8% YoY in Q2 FY26, despite a weak demand environment.

  • Successfully expanded product portfolio into new high-growth segments like PLB ducts, DWC pipes, PE gas pipes, PVC-O pipes, and UPVC doors/windows.

  • Strategic tie-up with Lubrizol for CPVC pipes aims to strengthen presence in high-margin category and improve sales mix beyond 25% in 2-3 years.

  • West India plant is ramping up production, and the new Varanasi plant is on track to commence operations soon, strengthening Eastern India presence.

  • Capex of INR92 crores in H1 FY26 was funded without debt, maintaining a strong balance sheet.

Concerns

  • Margins were under pressure in Q2 FY26 due to lower capacity utilization and heightened competition.

  • Weak end-user demand and high raw material price volatility impacted the sector, leading to cautious behavior and destocking by channel partners.

  • Kisan segment was a drag on EBITDA spreads, operating at 4-5% EBITDA margin, due to negative operating leverage and price wars.

  • Working capital cycle is slightly elevated in H1 FY26 due to high inventory levels.

  • Government spending on infrastructure projects has been slow, impacting demand for OPVC and other infra-related products.

Key financials

2 periods

Headline

  • Consolidated Sales Volume Growth
    8%
    YoY +8%
  • Apollo Standalone EBITDA/ton
    ₹10,000
  • Kisan EBITDA Margin
    4%
  • Kisan EBITDA/ton
    ₹4,000

Q2

  • Volume
    21,000 tons

What they filed

Q1 FY27: revenue up 7.3%, net profit down 237.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue250 308 315 275 236 −6%247 −20%347 +10%295 +7%
EBITDA19 23 24 21 16 −16%12 −48%18 −25%3 −86%
Net profit4 6 10 8 1 −75%-5 −183%0 −100%-11 −237%
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.

Segment breakdown

Share of EBITDA/ton
₹14,000 Total
  • Apollo Standalone ₹10,000 71.4%
  • Kisan ₹4,000 28.6%

Order book

low confidence
Management expects massive restocking by channel partners once anti-dumping duties are imposed, which should boost sales.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹150 Cr entirely through internal accruals and equity without debt
    • Capacity expansion to 2,86,000 tons over next 2 years
    • New plant in Varanasi ₹150 Cr
    We incurred a capex of INR92 crores in H1 following the spend of INR166 crores in FY '25. We remain committed to expanding our total installed capacity to 2,86,000 tons over the next 2 years without any debt to our book. Our working capital cycle is slightly elevated in H1 due to high inventory levels. However, it self settle back with higher sales in H2. ... We incurred a capex of INR92 crores in H1 following the spend of INR166 crores in FY '25. ... So, Varun, our capex so far in first half is INR92 crores, right? For the full year target is INR150 crores. And next year, this should go below INR100 crores for FY '27. And then the, it would be like normalized capex of INR40 crores, INR50 crores every year. ... So this year, maximum capex is for Varanasi, Varun, out of INR150 crores, which we will spend in full year.
  • Debt Debt disclosed
    We remain committed to expanding our total installed capacity to 2,86,000 tons over the next 2 years without any debt to our book. ... So all this capacity without debt, it will help me recover my revenue quickly.
  • Liquidity Liquidity disclosed Working capital cycle is slightly elevated in H1 due to high inventory levels, but expected to settle back with higher sales in H2. Increased government spending is expected to boost liquidity and improve cash flows.
    Our working capital cycle is slightly elevated in H1 due to high inventory levels. However, it self settle back with higher sales in H2. ... Additionally, increased government spendings on infrastructure projects should boost liquidity and improve cash flows across the ecosystem.

Guidance & targets

Volume

  • Consolidated Sales Volume Growth Volume · FY26 · Medium confidence 20% plus
    And our guidance also stands revised down which we were earlier hoping that we should be doing around 20% plus volume growth.

    — Anubhav Gupta

  • Consolidated Sales Volume Volume · FY26 · High confidence 100,000 tons
    Last year, we did 85,000 tons on consol basis, like above 20% volume growth guidance comes out to be 100,000 to 105,000 ton for the full year. We are confident that we should be achieving around 100,000 tons.

    — Anubhav Gupta

  • Consolidated Sales Volume Volume · FY27 · High confidence 125,000 tons
    And yes, 100,000 ton volume this year and 125,000 ton volume in the following year with improving spreads, we are very much confident that whatever ROC, whatever absolute EBITDA we have guided for, we will achieve those numbers.

    — Anubhav Gupta

Product Mix

  • CPVC Sales Mix Product Mix · next 2-3 years · High confidence beyond 25%

    From 15-18% today

    So with Lubrizol, the idea is to take CPVC sales mix beyond 25% in next 2, 3 years. And once we achieve that, you will see improvement in our margin.

    — Anubhav Gupta

  • Agri vs Housing/Infra Mix Product Mix · next 2-3 years · Medium confidence 75% agri, 25% housing/water infra

    From 60% housing plumbing, 40% agri + water infra today

    So right now 60% is housing plumbing and 40% is agri plus water infrastructure. In next 2, 3 years, we want to take agri to 75% and 25% from agri and water infrastructure.

    — Anubhav Gupta

Profitability

  • Margins Profitability · next 2-3 years · Medium confidence low double digit
    So directionally, we are confident that we would touch low double digit in next 2, 3 years.

    — Anubhav Gupta

ROCE

  • ROCE ROCE · eventually · Low confidence 20-22%
    And then eventually, we will hit 20%, 22%, which has always been our target.

    — Anubhav Gupta

Capex

  • FY Planned Capex Capex · FY26 · High confidence INR150 crores
    For the full year target is INR150 crores.

    — Anubhav Gupta

  • FY Planned Capex Capex · FY27 · High confidence below INR100 crores
    And next year, this should go below INR100 crores for FY '27.

    — Anubhav Gupta

  • Normalized Capex Capex · every year (normalized) · High confidence INR40-50 crores
    And then the, it would be like normalized capex of INR40 crores, INR50 crores every year.

    — Anubhav Gupta

Distribution

  • Retail Shops Connected via App Distribution · end of this fiscal year · High confidence 25,000-30,000
    So idea is to connect almost 25,000, 30,000 retail shops by end of this fiscal year, right?

    — Anubhav Gupta

Market context

  • ROCE ROCE · next 1-2 quarters · Medium confidence double digit

    From single digit today

    And matter of 1, 2 quarters, you will see that ROCE will go right now, it's single digit. It will move to double digit, right?

    — Anubhav Gupta

What to watch in Q3 FY26

Demand environment improvement

next quarter
Current Weak in H1, October also weak
Target Favorable demand from November onwards

Why it matters

Demand recovery is crucial for volume growth and margin improvement, as indicated by management's H2 optimism.

Looking ahead, we expect a more favorable demand environment starting from November onwards as construction activities are likely to resume post monsoon.

Risks & concerns

  • Weak end-user demand and raw material price volatility

    high

    Weak demand from private real estate and government infrastructure, coupled with PVC resin price fluctuations, led to cautious channel behavior and destocking.

    Management acknowledged

  • Slow government spending on infrastructure projects

    high

    Funds are not being released to contractors, which is killing demand and impacting fresh supplies, particularly for OPVC products.

    Management acknowledged

  • Lower capacity utilization and heightened competition

    medium

    These factors contributed to margin pressure across the sector, impacting Apollo Pipes.

    Management acknowledged

  • Elevated working capital due to high inventory levels

    medium

    Working capital cycle is slightly elevated in H1 but is expected to self-settle with higher sales in H2.

    Management acknowledged

Q&A highlights

7 direct
Revised guidance for FY26 given weak H1 performance Partial
So what we are still confident is that the last 5 months of the fiscal year should be better than the first 7 months... So hopefully, we should be touching about our earlier guidance which we gave, right?

Management acknowledges weak H1 but maintains optimism for H2, hoping to meet earlier guidance, indicating potential for significant recovery.

Asked by Sneha Talreja

Channel partners' reluctance to stock inventory despite impending Anti-Dumping Duty (ADD) Direct
So they don't have right now any confidence and when exactly it will come. Once it will come, then definitely they will go for increasing their stocks, which will definitely increase our sales number.

Highlights the impact of past volatility and delays in ADD imposition on channel behavior, suggesting a potential surge in demand post-ADD.

Asked by Keshav Lahoti

Low capacity utilization and aggressive capacity expansion plans Direct
You've got to understand our capex program, okay, which we kick started 2.5 years ago, right? ... So whatever capex program we are implementing, right, it's from a very like long-term perspective, 5 to 10 years, right? Demand situation becomes weak. It's a short-term phenomenon, right, which it will change.

Management justifies long-term capex strategy despite current low utilization, emphasizing future growth and the non-debt funding model.

Asked by Utkarsh Nopany

Kisan segment's low EBITDA margin in Q2 Direct
Kisan was a drag on the EBITDA spreads because Kisan volume run rate, if you see what we were achieving for last 2 quarters, it was sequentially down. And Kisan was operating at 4%, 5% EBITDA margin... So that was a drag.

Explains the specific reasons for Kisan's underperformance, attributing it to volume decline, negative operating leverage, and price wars in the Western market.

Asked by Keshav Lahoti

Rationale for CPVC tie-up with Lubrizol over local suppliers Direct
Yes, Mr. Shah. Actually, there is a quality, you can say, superiority in Lubrizol as compared to the local suppliers in India which are already there. ... Secondly, the brand value also impacts too much in the institutional and the contractor sales, where Lubrizol has an upper hand because of FlowGuard brand already being at the top in the industry.

Clarifies the strategic advantage of partnering with Lubrizol, focusing on superior quality and brand recognition for institutional sales.

Asked by Pujan Shah

Internal initiatives for efficiency and distribution expansion Direct
Secondly, yes, improving efficiencies. That's like 24/7, 365 days job, Karan. All the plants, I mean, our most I would say, efficient plants are, number one, the mother plant in Dadri and second, Kisan, the Silvassa plant, right? So these 2 plants are the benchmark for us. ... We have introduced an application, mobile app where we are kind of connecting all the retail shops on that app so that there could be direct communication with those retail shops.

Details the company's focus on operational efficiency across plants and leveraging technology (mobile app) to expand distribution reach and monitor secondary sales.

Asked by Karan Bhatelia

Impact of HDPE sales decline on overall volume growth Direct
So here, you have to remove the HDPE sales for APL Apollo, which used to be like mid-double-digit contribution 1.5 years ago. And now it is like less than 5%, right? So in trade segment, we have increased our sales volume. But when you look at the total pipe volume, you don't see that because HDPE volume like collapsed by 80%, 90%, right, which used to contribute 15% to our sales volume 1.5, 2 years ago. So that's why you see the decline in volume.

Explains that the apparent decline in overall volume is due to a strategic reduction in low-margin HDPE sales, while core trade segment volumes have increased.

Asked by Utkarsh Nopany

High tax expense and other income in Q2 Direct
So there is a small sale of extra land what we sold in Dadri, right? So that came into other income. Yes, that was a noncore asset, which was lying in the book, so we kind of disposed it off. And tax rate, just one second. So Apollo stand-alone is 21% tax rate, which is in line. Actually, Kisan had reported a loss at PBT level. So that's why it appears high. The tax rate on consolidated basis, but it will get adjusted in the subsequent quarters.

Clarifies that other income was from a one-time land sale and explains the higher consolidated tax rate due to Kisan's PBT loss, which will normalize.

Asked by Varun Julasaria

3 min read 8 chapters

Detailed narrative

Q2 FY26 Performance Overview

Apollo Pipes reported an 8% year-on-year growth in consolidated sales volume for Q2 FY26, reaching approximately 21,000 tons. Despite this growth, margins were under pressure due to lower capacity utilization and heightened competition across the sector. The company's standalone EBITDA per ton was around INR10,000, while the Kisan segment experienced a drag on EBITDA spreads, operating at a 4-5% margin or INR4,000-6,000 per ton. The overall industry faced significant headwinds from weak end-user demand and raw material price volatility.

Strategic Initiatives and Product Portfolio Expansion

The company is actively pursuing a 4-pronged strategy to navigate the current environment. This includes expanding its product portfolio with additions like PLB ducts, DWC pipes, PE gas pipes, PVC-O pipes, and venturing into UPVC doors and windows. These new products are designed to diversify into high-growth segments and cater to infrastructure, real estate, and utility sectors. Management expects these new segments, currently contributing less than 5% of volume, to ramp up significantly as the market accepts them.

Capacity Expansion and Utilization

Apollo Pipes incurred a capex of INR92 crores in H1 FY26, with a full-year target of INR150 crores. The company is committed to expanding its total installed capacity to 286,000 tons over the next two years, funded entirely without debt. The new plant in Varanasi is on track to commence operations in the coming months, strengthening the company's presence in Eastern India. While current capacity utilization is low, management views this as a short-term phenomenon and expects new capacities to ramp up to 70-75% utilization in the next 2-3 years.

Raw Material and Pricing Dynamics

The sector has been impacted by frequent and sharp fluctuations in PVC resin prices, leading to cautious behavior and continuous destocking by channel partners. The potential imposition of Anti-Dumping Duty (ADD) on PVC resin is highly anticipated, with management expecting it in November. This is projected to lead to a 7-8% increase in PVC resin prices and trigger massive restocking by channel partners, which would significantly boost sales volumes.

Demand Outlook and Government Spending

Demand was weak in H1 FY26, particularly due to a slowdown in private real estate and government infrastructure spending, exacerbated by heavy monsoons. October also saw weak demand due to festival holidays. However, management anticipates a more favorable demand environment from November onwards as construction activities resume post-monsoon and increased government spending on infrastructure projects boosts liquidity and cash flows. The company aims for 100,000 tons sales volume in FY26 and 125,000 tons in FY27.

CPVC Segment and Lubrizol Tie-up

Apollo Pipes is increasing its focus on CPVC pipes, which currently contribute 15% of its volume. The company has tied up with Lubrizol, a leading raw material supplier, to strengthen its presence in this high-margin category. This partnership is strategic due to Lubrizol's superior quality and strong brand value (FlowGuard), which will help Apollo Pipes cater to institutional and contractor segments where it previously had limited presence. The goal is to increase CPVC sales mix beyond 25% in the next 2-3 years.

Working Capital and Capital Allocation Strategy

The working capital cycle was slightly elevated in H1 FY26 due to high inventory levels. However, management expects it to self-settle with higher sales in H2. The company's long-term capex plan of INR600 crores from 2024-2027, including INR150 crores for FY26, is being funded entirely through internal accruals and equity, without incurring any debt. This debt-free expansion strategy is expected to help the company recover revenue quickly once demand improves and improve ROCE from single-digit to double-digit in the next 1-2 quarters.

OPVC Segment Growth and Market Penetration

The OPVC segment, primarily targeting government infrastructure projects, is seeing increasing competition. Demand from most states is still in the implementation phase of converting from DI to OPVC, suggesting a few more quarters are needed for demand to ramp up and pricing to see an uptrend. While only 3-4 states were using OPVC last quarter, this is expected to double in the next quarter, with states like Bihar, Rajasthan, and Kerala in the final stages of tender processes. The company is also expanding its sales team and distribution reach, including connecting 25,000-30,000 retail shops via a mobile app by year-end.

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