APL Apollo Tubes

• OCF 110% of EBITDA. OCF was utilized for Raipur Capex & Dividend.
• Raipur Capex is near completion. Total Raipur Capex Rs 1000crs (800crs already spent)
• Raipur volume for Q2-12,000 tonnes. Q3 is expected to be 75,000 tonnes. Q4 is expected to be 100,000 tonnes. Raipur Volume guidance: 600,000-700,000 Tonnes & 1mn Tonnes in FY24 &FY25 respectively.
• Minor write-downs in Raipur plant this quarter impacted margins.
• Raipur product margins are likely to be 7,000-8,000/tonnes.
• HRC CFR is $540, domestic primary steel is Rs54,000/t and secondary is around Rs50,000/t
• 30% volume CAGR expected between FY’22 to FY’25
• Sold more commodity products this quarter.
• Product prices have come down from Rs 74,000 to 54,000 in 6 months, this has impacted the EBITDA in the first half. Don’t expect prices to come down much from this point on. Expect the price to correct by not more than Rs2,000-3,000/t in the current quarter.
• Expected volume will be 2.2mn tonnes. Full year EBITDA of 4,500/tonnes. Expected EBITDA/T will be 5,000/tonne in the second half.
• Demand is expected to remain strong as steel is replacing wood in home fitting like doors and railings.
• Brand expenses will come down from 50crs to 25-30crs pa. Expected spend next year will go up.
• Export margins are slightly lower than domestic. Total exports are 5% of total volumes.
• Market share is going up consistently. Current market share is between 55-60%
• Raipur plant has taken debt to fund its working capital. Cash generated in APL Tubes (Parent) will be kept in the parent.
• Up to FY’25 the total capex will be Rs 500crs and the capacity will go up to 4.5mn tonnes.