The Iron and Steel Products sector in India is a crucial component of the economy, projected to produce approximately 100 million tonnes of crude steel in FY24. India ranks as the second-largest steel producer globally, contributing significantly to infrastructure and manufacturing growth, supported by robust domestic demand and government initiatives.
With a market capitalization of Rs 40,830.80 crore, on Thursday, the shares of APL Apollo Tubes Ltd closed at Rs 1,471.25 per share, decreased around 2 percent as compared to the previous closing price of Rs 1,496.95 apiece.
Market Position:-
APL Apollo Tubes Limited is indeed recognized as a market leader in the tube manufacturing sector in India. The company has achieved significant market dominance, capturing approximately 55% of the market share in FY2024, which includes both organized and unorganized segments of the industry.
APL Apollo Tubes Ltd is actively aiming to capture 60% of the market share by FY 26 in the Indian tube manufacturing sector. The management has expressed a clear vision and strategic initiatives to increase this share, leveraging its strong distribution network and innovative product offerings to enhance its competitive position in the market.
Market dynamic:-
Management stated that current steel pricing is likely sustainable, with minimal room for further declines as steel mills face low profitability and new capacities emerge. They expect robust volume growth in H2 FY25, aiming for a total sales volume of 3.2 million tons for the year.
Capacity and Expansion Plans:-
APL Apollo operates at a 4.3 million ton capacity, targeting 5 million tons by FY26 with ₹3–3.5 billion in CAPEX funded through internal cash flows. New Greenfield plants in Siliguri, Gorakhpur, and Bangalore will support East and South India markets, adding 1.5 million tons annually.
Margin Guidance:-
Management reaffirms a sales volume target of 4 million tons for FY26 and 5 million tons by FY27, projecting EBITDA margins to normalize to ₹5,000 per ton over the next 2-3 quarters. They express confidence in maintaining sustainable margins through FY26, supported by steady demand and operational efficiencies.
Competitive Landscape:-
Management noted rising competition in the heavy structural segment, especially from JSPL, but expressed confidence in their strong branding and distribution network to preserve market share. They believe that increased competition will broaden the overall market rather than adversely impacting their business.
Inventory and pricing strategy:-
In Q2, the company faced an inventory loss of ₹2,000 per ton due to a ₹7,500 per ton steel price drop, affecting profitability. To boost sales, they offered a ₹500 per ton discount but plan to retract this as prices stabilize.
Company Profile:-
APL Apollo Tubes Limited is engaged in the business of production of electric resistance welded (ERW) steel tubes. Its multi-product offerings include over 1,100 varieties of pre-galvanized tubes, structural steel tubes, galvanized tubes, MS black pipes, and hollow sections.
Written by:- Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
