APOLLOPIPENSEMay 15, 2025

Apollo Pipes Limited

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111turns

12analyst exchanges

5executives

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Management on call

Sameer Gupta

CHAIRMAN AND MANAGING

Arun Agarwal

JOINT MANAGING DIRECTOR – APOLLO PIPES LIMITED

Ajay Kumar Jain

CHIEF FINANCIAL OFFICER

Anubhav Gupta

GROUP CHIEF STRATEGY

Aasim Bharde

DAM CAPITAL ADVISORS LIMITED

Key numbers — 40 extracted

ur channel partners. We believe that the overall PVC piping industry would have declined by about 5% in FY '25. It impacted Apollo Pipes also as we are the seventh largest player in the country. H

23%

Apollo Pipes also as we are the seventh largest player in the country. However, we still managed 23% volume growth backed by our strategy of inorganic and geographical expansions. The company's EBIT

INR95 crore

backed by our strategy of inorganic and geographical expansions. The company's EBITDA was flat at INR95 crores as margin declined due to aggressive sales and slow ramp-up at our Western plant. Apollo Pipes

20%

sive sales and slow ramp-up at our Western plant. Apollo Pipes has laid down solid foundation for 20% to 25% volume growth for FY '26. I'm pleased to tell you, that we have 3 additional revenue drive

25%

les and slow ramp-up at our Western plant. Apollo Pipes has laid down solid foundation for 20% to 25% volume growth for FY '26. I'm pleased to tell you, that we have 3 additional revenue drivers, whi

rs,

to 25% volume growth for FY '26. I'm pleased to tell you, that we have 3 additional revenue drivers, which are oPVC product segment, Window Profile product segment and Varanasi plant. The EBITDA ma

INR166 crore

water infrastructure and housing to return sometime in FY '26. In FY '25, we incurred a capex of INR166 crores after INR250 crores in the previous year. Our capacity has increased to 2,32,000 tons, which sha

INR250 crore

e and housing to return sometime in FY '26. In FY '25, we incurred a capex of INR166 crores after INR250 crores in the previous year. Our capacity has increased to 2,32,000 tons, which shall further increase

INR100 crore

crease to 2,60,000 tons by the year-end FY '26. The residual capex would be INR100 crores to achieve this capacity. It will be funded from internal cash flows. At a consolidated level,

INR46 crore

apacity. It will be funded from internal cash flows. At a consolidated level, we have net cash of INR46 crores despite heavy capex spends. Our working capital cycle remained prudent at 36 days, which resulte

65%

ing capital cycle remained prudent at 36 days, which resulted in operating cash flow to EBITDA of 65%. We expect this to improve further in coming years. On top of it, we will have equity infusion of

INR110 crore

We expect this to improve further in coming years. On top of it, we will have equity infusion of INR110 crores from an Omani's fund against which INR28 crores already credited in April with balance coming in

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Guidance — 20 items

Sameer Gupta

opening

“We expect government thrust on water infrastructure and housing to return sometime in FY '26.”

Sameer Gupta

opening

“It will be funded from internal cash flows.”

Sameer Gupta

opening

“We expect this to improve further in coming years.”

Sameer Gupta

opening

“These proceeds will be used for investment into greenfield plant in South India, along with our other company requirements.”

Sameer Gupta

opening

“However, we are confident of achieving 25% ROCE in next 2 years as we increase our sales volume at 25% CAGR with margin improvement.”

Keshav Lahoti

“And the volume growth guidance, which you have given 20%, 25%.”

Anubhav Gupta

“So if you look at Apollo Pipes standalone, we expect volume growth of 20% and Kisan having a slightly lower base, right, and the revenue and volumes have been depressed there for many years.”

Anubhav Gupta

“And the idea to acquire Kisan was that we will be able to help them ramp up pretty quickly.”

Anubhav Gupta

“And in FY '27, there will be further improvement of 200, 250 bps.”

Anubhav Gupta

“So in 2, 3 years, we expect Kisan to generate or to become as efficient as Apollo Pipes in terms of working capital.”

Risks & concerns — 12 flagged

The demand was highly impacted from slowdown in private real estate and government infrastructure spends.

— Sameer Gupta

It could have been slightly better, but industry pain persisted in January to March quarter as PVC prices continue to decline and we did not see any improvement in infrastructure and real estate sectors.

— Sameer Gupta

So we know that in the last 8, 9 months, there was a bit of slowdown and the fund release was a challenge from the government side.

— Pujan Shah

So JJM has been weak for the last 13, 14 months now consistently, right?

— Anubhav Gupta

As of now, we are remaining cautious on this particular segment.

— Anubhav Gupta

So do you feel any green shoots also in JJM or still there is a lag, as you have said, that still needs to watch on the cautious mode due to 2, 3 months down the lines as government need to spend more.

— Pujan Shah

But that is quite a challenge in terms of equipment procurement.

— Pujan Shah

But sir, you have been saying that we have been cautious in terms of JJM and we are looking for next 2, 3 quarters.

— Pujan Shah

Or are we still seeing the impact of the same?

— Sneha Talreja

Because the demand environment is pretty weak.

— Utkarsh Nopany

Anyways, margins are under pressure for the whole industry.

— Anubhav Gupta

Thanks a lot for the opportunity, in one of the answers to your previous participant, while you said that demand is at this point of time weak and you are aiming at second half, could we get some guidance of what would be your split between first half and second half volume growth in in case that is available with you?

— Sneha Talreja

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Q&A — 12 exchanges

Sir, thank you for the opportunity, do we had any inventory loss for this quarter?

Anubhav Gupta

Anubhav Gupta here. PVC prices did decline this quarter. But as we carry very little inventory, so inventory losses are very, very miniscule. And the volume growth guidance, which you have given 20%, 25%. So can you please split between what sort of growth you are targeting for stand-alone and Kisan because it's a complete different geography, both Kisan and standalone. So if you look at Apollo Pipes standalone, we expect volume growth of 20% and Kisan having a slightly lower base, right, and the revenue and volumes have been depressed there for many years. And the idea to acquire Kisan was th

Yes, sure. Sir, my first question pertains to JJM. So we know that in the last 8, 9 months, there was a bit of slowdown and the fund release was a challenge from the government side. So just wanted to know your part. So how is the situation right now? And what could be the potential in this year for the JJM purpose?

Anubhav Gupta

So JJM has been weak for the last 13, 14 months now consistently, right? The product, what we supply in JJM is HDPE pipes. In FY '24, the contribution from this segment was around 12% to 15%. And this year, it fell below 5% in FY '25. So our volume kind of declined by almost 60%, 65%, right? And for FY '26, we have not factored in any substantial volume recovery in HDPE pipes for JJM. And the reason is that, yes, I mean, government did increase the budget allocations for water infrastructure, right? And there were some payments to the contractors, which were made in last 1, 2 months also, whic

Thank you for taking my question. Anubhav, if you can just elaborate a bit on this vendor profile part. I mean, when are we commercializing this product? And where do we see the revenue ramp-up for coming 2 to 3 years?

Anubhav Gupta

So Udit, the product launch is lined up for June of 2025, right, which is next month. We have almost finished the capex, very miniscule capex is pending, which shall be completed in the next 40, 50 days. And then we have lined up the launch of this product. So yes, it's a new segment for us. In next 2, 3 years, we expect this product to contribute substantially to our revenue and margins. And just one bookkeeping thing. So when we do the consol minus standalone, there seems to be some intersegment volumes. So could you provide some light as in why has that happened in this quarter specifically

Just a couple of questions from my end. If I look at your last year's volume growth ex of Kisan, that has been largely been flattish. One reason that you gave was, of course, HDPE demand missing on ground. But is there anything which was troubling other than this the entire of last year? And how is the current ongoing demand at this point of time? And is the channel destocking largely done with? Or are we still seeing the impact of the same?

Anubhav Gupta

So Sneha, so two things to it, right? So volume is flat, yes, because of collapse of HDPE sales. But on the other side, I'd like to tell you that our cPVC volume increased in double digits, right? Our water tank business increased in double digits. Our agri business also which is like 45% of volume, even that grew in double digits. So it's mainly because of collapse of HDPE. Yes, the regular uPVC pipes, which goes into housing plumbing. So there, the volume was flattish. Of course, it's a commoditized product. The industry had massive price war into this segment and a lot of smaller players wh

Sir, my question is again on your sales volume number for the March quarter. So if we remove the Kisan volume from our consol number, then the net stand-alone volume was down by 5.5% in this March quarter despite we have been aggressively spending on the capex for the last 2 years. So I wanted to know what is the reason for the same? And like you have also guided that we are targeting to grow our stand-alone volume by 20% to 25% rate in FY '26. So what is giving you the confidence that you are guiding such a high volume growth number when you are seeing such a muted demand in the market? Sir,

Anubhav Gupta

See, I mean, you look at value-wise, right? Value-wise, it is because of a drop in the net selling realization on the back of declining PVC prices. On volume wise, sir. I'm asking on volume growth. Volume is flat. Volume is not minus 5%. Volume is flat. 21,270 was in Q3 and 21,122 is in quarter 4. So it is flat. It is not down 5%. Sir, like if we adjust the consol volume from your whatever the Kisan number you have given, then our net standalone volume number is down by 5.5%. So this is because of the inter segment sales, which Mr. Jain explained over call short while ago. We have also given i

Sir, I've just got two quick questions. One, if you could just throw some color around the TAM for the oPVC business? And how do you see the scale up for yourself as the industry expands, right? So when you see the business from a 2-, 3-year standpoint, how does the oPVC exactly scale up for us as well as the industry? And what is the TAM looking like? And secondly, second question is on the expansion in the distribution network for us in the different geographies. How do you see that spanning out?

Anubhav Gupta

So the market analysis, what we had done before investing into oPVC segment, we believe that INR7,000 crores, INR8,000 crores worth of annual sales can be generated through replacement of ductile iron pipes with oPVC, right? So that's the TAM on an annual basis as per our analysis. And when we speak to our peers and the machine vendors, I mean, so they are also aligned near about same figure. So yes, the TAM is around INR7,000 crores, INR8,000 crores a year. And sir, how do you see what is our current contribution from oPVC? And how do we see that spanning out, let's say, by FY '27 or FY '28 w

Yes. Sir, I just had one question. What were the ad spends for this year? And what will be for the coming year?

Anubhav Gupta

So ad spends remain at around 1% of the revenue, right? And given that we are able to increase our revenue by 20%, 25%, right? So that much increase you will see in the ad spend also. I don't think we're going to go beyond 1%, 1.25% because whatever our focus has always been more on BTL activities, right? We have launched an app to enroll as many plumbers as we can, right? So we are going to launch a plumber incentive scheme. Right, wherein we have started enrolling plumbers on a tech app, right? And idea is to remain strong in the BTL activities, right? Anyways, margins are under pressure for

So right now, what we are doing in Kisan is working on very, very basic infrastructure, whether it's towards the capacities or it is towards the distribution network, right? So like I said, we made a few investments to fix the plant issues, right? Now whatever production is there, it is like streamlined, right. Quality, we work on how to improve quality, right, got some systems in place, what Apollo Pipes had been following for many years to improve the efficiencies, et cetera. On the distribution then on the distribution front, right, so they are top 100 distributors, right? We are ensuring t

Anubhav Gupta

Not capacity, volume. Capacity is already 50,000, 60,000 tons a year. Nabanu Mondal Yes. So when we are saying that we are increasing the volumes to 35,000 to 40,000 tons, when do you think that this will be possible? I mean, within the next year? Or how do you see -- because when we acquired the plant, we were already, I think, doing 25,000 tons of volumes. And I think that it has been flattish in the current year as well. So could you throw some light on that? Right. So see, I mean, FY '25 volume for Kisan was around 20,000 tons, right? Now we are guiding for 25% volume growth, right? So ide

So, I just was wondering on the Kisan molding with PVC pipe equipment. So we said that we have bought an equipment which is cheaper in terms of pricing and we are not into agreement of 7 players. So just wanted to know last time when we had a con call, we said that we won't be procuring machines other than Spain technology. And right now, we have been trying to procure from a cheaper equipment available right now. So is that the equipment supplier is now being comparable to the Molecor or the Spain technology? Is that the efficiency is the same compared to them or what we have been seeing on t

Anubhav Gupta

No, not at all. The quality is not at all similar, right? See, India is a market which can absorb products of different qualities, right? So where the specifications are for like 100% quality, their Molecor is there, right? And then where quality as per whatever the tender documents are there, right? So if it calls for slightly lower quality, then we can supply from that plant, right? So it will depend on the tender specifications, right? And the idea is to have the full SKU range in oPVC, what the whole industry is going for. You require better quality product, we have that product available.

Anubhav Gupta

See, what I said is that macro seems to be improving in second half, right? Our trajectory, like how it has been in earlier years, it should be like 40%, 45% in H1 and 55% to 60% in H2, right? What I was referring to was the macro factors, not Apollo Pipes business model. Understood, thanks.

Sir, just want to understand on the window profile and the door profile segment, what sort of capex will we be incurring there? And when can we expect the commercialization to happen?

Arun Agarwal

So, window project, the capex is expected to be somewhere between around INR60 crores. And we have already done almost 80%, 85% of the expenditure. And we are launching it in June of 2025. Okay. And can you also throw some light on the demand side of it, sir? So obviously, if I have invested into a new segment, so our estimates say that there is a good demand because look, currently, any houses being constructed, wood is not being used actually. So it is a new type of product that are being used. So, it is either uPVC or aluminum. So if you see the TAM, right, TAM is infinite, like how many wo

Yes. Thank you all for patient listening. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarification or would like to know more about the company, please feel free to contact our team. Thank you once again for taking the time to join us on the call.

Management

Speaking time

Anubhav Gupta

Moderator

Pujan Shah

Keshav Lahoti

Sneha Talreja

Utkarsh Nopany

Umakant Sharma

Udit Gajiwala

Arun Agarwal

Ajay Kumar Jain

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Opening remarks

Aasim Bharde

Thank you, Navya. Good morning, on behalf of DAM Capital, it's a pleasure to welcome you all on Apollo Pipes Q4 and FY '25 results conference call. From the Apollo Pipes management on the call, we have Mr. Sameer Gupta, Chairman and Managing Director; Mr. Arun Agarwal, Joint Managing Director; Mr. Ajay Kumar Jain, CFO; and Mr. Anubhav Gupta, Group Chief Strategy Officer. I hand over the call to the management now for their opening comments.

Sameer Gupta

Thank you. Good morning, everyone. This is Sameer Gupta, CMD, Apollo Pipes here. I, along with my colleagues, Arun Agarwal, JMD; A.K. Jain, CFO and Anubhav Gupta, Group CSO. Welcome, everyone, to Apollo Pipes Q4 FY '25 earnings call. FY '25 was amongst the most tough years for the PVC pipe industry. The demand was highly impacted from slowdown in private real estate and government infrastructure spends. On the top of it, the frequent fluctuation in PVC resin prices led to continuous destocking by our channel partners. We believe that the overall PVC piping industry would have declined by about 5% in FY '25. It impacted Apollo Pipes also as we are the seventh largest player in the country. However, we still managed 23% volume growth backed by our strategy of inorganic and geographical expansions. The company's EBITDA was flat at INR95 crores as margin declined due to aggressive sales and slow ramp-up at our Western plant. Apollo Pipes has laid down solid foundation for 20% to 25% volume

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