Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales volume increased by 25% to 26,500 tons, driven by the integration of Kisan.
- EBITDA increased by 11% YoY with a 10% margin profile.
- Kisan turned profitable after many years, contributing positively to the consolidated financials.
- The company remains debt-free despite significant CapEx commitments.
- Apollo Pipes Ltd (BOM:531761, Financial) aims for a revenue growth of 25% to 30% CAGR over the next four years.
Negative Points
- Consolidated profit declined by 10% YoY due to higher depreciation.
- Sales volume excluding Kisan was flat YoY, mainly due to a decline in government infrastructure business.
- The company faces challenges in the HDPE segment, which saw a significant drop in sales.
- There is uncertainty in PVC prices, which have been volatile and could impact margins.
- The company has missed its top-line guidance for the past three consecutive quarters.
Q & A Highlights
Highlights of Apollo Pipes Ltd (BOM:531761) Q1 FY25 Earnings Call
Q: What is the stand-alone current volume number?
A: 20,900 tons. (Ajay Jain, CFO)
Q: What are your future plans for Kisan? How will you improve Kisan's margins?
A: Kisan did a revenue of INR65 crores in Q1. We aim to take Kisan's sales to INR450-500 crores this financial year and INR750-800 crores by FY27 with a 10% EBITDA margin. (Anubhav Gupta, Group Chief Strategy Officer)
Q: Can you provide more clarity on the CapEx plans and timelines?
A: We have three ongoing projects: Varanasi plant, O-PVC line, and window profiling. Total CapEx for these is around INR150 crores. Varanasi is expected to start production by Q4 FY26. (Anubhav Gupta, Group Chief Strategy Officer)
Q: Has there been a shift in sales from Apollo Pipes to Kisan Mouldings?
A: No, there is no cannibalization. Apollo wasn't strong in Western India, and Kisan fills that gap. Both brands will run parallelly to capture market share from smaller players. (Anubhav Gupta, Group Chief Strategy Officer)
Q: What is the targeted margin for Apollo Pipes over the next 2-3 years?
A: Apollo should move towards a 12-13% EBITDA margin, but will remain around 10% for the next two years due to ongoing CapEx. (Anubhav Gupta, Group Chief Strategy Officer)
Q: What is the revenue guidance for the next three years?
A: We aim to achieve more than INR2,600 crores of revenue by FY27, up from INR1,000 crores in FY24. (Anubhav Gupta, Group Chief Strategy Officer)
Q: Why is the current focus not on oil and gas and telecom sectors?
A: We see a large opportunity in the housing plumbing segment and are focusing on leveraging our strong distribution network and brand in this area. (Anubhav Gupta, Group Chief Strategy Officer)
Q: What is the expected revenue from O-PVC pipes this year?
A: This year, O-PVC pipes should contribute around 5% to overall revenue, and 8-10% next year when all lines are operational. (Anubhav Gupta, Group Chief Strategy Officer)
Q: What is the CapEx plan for the next three years?
A: The balance CapEx for Varanasi, window profile, and some brownfield expansion is around INR250 crores. An additional INR200 crores is planned for South India. (Anubhav Gupta, Group Chief Strategy Officer)
Q: What is the utilization rate for Apollo Pipes and Kisan?
A: Both Apollo Pipes and Kisan are operating at around 55% utilization. (Anubhav Gupta, Group Chief Strategy Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
