APOLLO PIPES LTD - Q3 FY21 - RESULTS ANALYSIS

 

APOLLO PIPES LTD

Q3 FY21 RESULTS ANALYSIS

 

Apollo Pipes, is among the top 10 leading piping solution providing Company in India. Headquartered in Delhi, the Company enjoys strong brand equity in the domestic markets.

With more than 3 decades of experience in the Indian Pipe Market, Apollo Pipes holds a strong reputation for high quality products and an extensive distribution network.

Equipped with state-of-the-art infrastructure, the Company operates large manufacturing facilities at Dadri and Sikandarabad in UP, Ahmedabad – Gujarat and Tumkur – Karnataka, with a total capacity of 100,000 MTPA.

The multiple and efficient product profile includes over 1,000 product varieties of cPVC, uPVC, and HDPE pipes, Water storage tanks, PVC taps, fittings and solvents of the highest quality.

The products  cater  to  an  array  of  industrial  applications  such  as  Agriculture,  Water  Management, Construction, Infrastructure, and Telecom ducting segments. The Company’s extensive distribution network spreads across 600+ channel partners.

MANAGEMENT

Mr. Sameer Gupta  : Managing Director

Q3 FY21 Financial Performance

Highlights

 

Performance Review for Q3 FY21 vs. Q3 FY20

 

· Sales Volume higher by 7% to 11,445 tons from 10,712 tons

· Revenue higher by 28% to Rs. 128.1 crore compared to Rs.100 crore

· EBITDA higher by 139% to Rs. 25.5 crore as compared to Rs. 10.7 crore ; EBITDA MARGIN at 20%

· Net Profit after Tax up by 145% to Rs. 16.3 crore compared to Rs. 6.7 crore

 

Apollo Pipes (in Rs. Cr.)	DEC'20	Sep '20	Dec '19	YOY	QOQ
Net Sales	128.06	123.3	100.02	28.03	3.86
Raw Materials	87.78	74.08	77.39	13.43	18.49
Total Exp	107.63	112.55	94.42	13.99	-4.37
Other Income	1.86	1.93	2.87	-35.19	-3.63
Interest	0.64	0.72	1.71	-62.57	-11.11
P/L Before Tax	22.29	12.69	8.48	162.85	75.65
Tax	5.96	3.19	1.81	229.28	86.83
Net Profit	16.33	9.5	6.67	144.83	71.89
Equity	13.11	13.11	13.11	0	0
Basic EPS	12.46	7.25	5.08	145.28	71.86

 

 

FV   10

MP  736

PE   14.77

"52 Week Range  :  L 282.00  :  H 769.90

Volume

60,593" 

 

Performance Review for 9M FY21 vs. 9M FY20

 

· Sales Volume lower by 2% to 34,346 tons from 34,971 tons

· Revenue higher 10% to Rs. 343.9 crore from Rs. 313.8 crore

· EBITDA higher by 32% to Rs. 47.2 crore compared to Rs. 35.8 crore

· Net Profit after Tax up by 25% to Rs. 27.8 crore compared to Rs. 22.3 crore

 

Management’s Message

Mr. Sameer Gupta, Managing Director, Apollo Pipes says:

“We have reported an encouraging performance during the quarter led by a robust uptick in consumption in the domestic markets.

During the quarter, our sales volume grew by 7% to 11,445 MTPA, driven by a healthy contribution from the cPVC, HDPE pipe and value-added product segment of Fittings.

Cost-optimization measures and improved contribution from the high-margin fittings segment further resulted in a better gross margin performance during the quarter.

From an operational standpoint, our existing manufacturing facilities at Dadri, Ahmedabad and Tumkur are operating at steady utilization levels and we remain confident of further improving it to the optimal levels in the quarters ahead.

I am also happy to share that the plan to operationalize our Greenfield facility at Raipur is advancing well and we remain on track to commission this facility by March 2021.

We are also progressing on our brownfield expansion plans at the three plants of Dadri, Ahmedabad and Tumkur.

In addition, our latest range of Water Storage Tanks are seeing strong acceptance in the domestic market and accordingly, we have already doubled the capacity for this product at our plant in Sikandarabad (Dadri) and also commissioned 1 unit at Tumkur.

So, on the whole, the planned capacity additions should enable us to deliver improved sales momentum, going forward.

Looking ahead, the various pro-growth measures undertaken by the Government, especially in the rural, infrastructure and agricultural space should lead to better demand and consumption of our products in the domestic market over the medium-to-longer term.

We are confident that once the macro-situation normalizes, we should be able to deliver strong and sustainable growth, going forward.”

Key Developments

Company on-track to achieve a production capacity exceeding 100,000 MTPA by March 2021 - Greenfield and Brownfield manufacturing expansions of the Company progressing as per schedule 

The Greenfield facility at Raipur is marking steady improvement and the Company remains on track to fully operationalise the plant by March 2021. The facility, with a proposed installed capacity of 7,200 MTPA, is strategically located and will help boost volumes in high-potential domestic markets in Central and East India

 In addition, the Company is undertaking staggered brown field expansions at all of its existing facilities across the country, which are also progressing as per schedule

 On the whole, the Company is aiming towards a healthy capacity upgradation and is on-track to achieve a total production capacity exceeding 100,000 MTPA by March 2021 Apollo Life – Water storage tank seeing strong response from the domestic market

 The Company’s latest launched product – water storage tanks has seen strong acceptance in the domestic market and the product contributed to improved sales during the quarter

 In order to address the increased demand for this product, the Company has already doubled the capacity for  this product  line  at  its current manufacturing  facility  at  Sikandarabad  (Dadri) in November 2020 and 1 Unit at Tumkur location.

 The product launch is in-line with the Company’s growth strategy to improve its product offerings across the value chain that efficiently leverages the ‘APL Apollo’ brand reach and recall. Going forward, this will enable enhanced business visibility and improved sales performance for Apollo Pipes. 

AT A GLANCE

Among the Top 10  leading PVC pipe  manufactures in India

1,00,000 MTPA Capacity* as on 31Dec 2020

4 Manufacturing  Plants

600+Channel Partners

1500+SKU’s

14% 5-year Sales Volume  CAGR

19% 5-year Revenue CAGR

29% 5-year Net Profit CAGR

 

Q3 FY21 AT A GLANCE

 

19% ROCE in 9M FY21

16.3 Cr.PAT 145% YoY increase

11,445 MT Sales Volume  7% YoY increase

128 Cr. Revenue  28% YOY increase

Rs.25.5 Cr. EBITDA* 138% YoY increase

58 Days Net WC days Continuous  focus on improving WC cycle

PRESENCE ACROSS SECTORS

Agriculture

Water Management

Telecom Ducting

construction

Oil and Gas

SUCCESS MILESTONES

2020-21

• Concluded the  strategic acquisition of  Kisan Mouldings’  manufacturing unit in  Bengaluru

• Successful listing of  Company’s shares on  NSE

• Started Manufacturing Water tank, Solvent &  Bath Fittings

2019

• Concluded promoter  infusion of Rs. 202  crore through issuance  of Equity Shares and  fully convertible  warrants on  Preferential basis

Robust 5-year CAGR(FY16 – FY20)

14% Growth in Sales Volume  

25% Growth in EBITDA  

29% Growth in PAT

Diversified Product Portfolio with total offerings at 1,500+,  Aiming to achieve 2,500+ products to the basket

Range of products manufactured at the technologically-advanced manufacturing facility at Dadri  and Ahmedabad

•Emphasis on innovation: One of the first companies to launch “Super Lock System” pipes in the  country - Awarded 10 year patent for the innovative product

• Launched ‘Plastic Faucets, Taps and Showers’ in the domestic market – to drive higher brand  visibility through New Products

 

Capacity Expansion to aid long-term growth plan –Target to install 125,000 MTPA by March 2021:

 

Efficiently leverage the ‘APL Apollo’ brand reach and  recall to drive higher growth

The ‘APL Apollo’ Brand Edge enables better reach and product competitiveness

PVC Pipe Industry

The Indian PVC pipes and fittings market expected to register 15% CAGR during FY18 - FY26

•The domestic plastic pipes industry size at ~ ₹ 315B

•Organized players account for ~60% market share

•Key features of plastic pipes against other pipes- Lightweight- Ease of transportation- Longer life span

•Key growth drivers:- Government’s push for cleanliness and sanitation to boost water management sector- Increased Building of affordable houses and growing housing demand- Requirement for infrastructure for irrigation and water supplies

FUTURE OUTLOOK

Strengthen  foothold in  existing  markets of  North and  Western India

Undertake a  phase-wise  capacity  expansion at the existing facilities  over the next  few quarters  Successfully  integrate  inorganic  acquisition in  the South

Register solid  growth in  volumes –targeting  volume growth  of around 25%+ CAGR

Penetrate and establish  footprint into  neighboring  markets in  Central and  Eastern India

Improve  utilization at  the existing  manufacturing  plants at Dadri and  Ahmedabad

Undertake  various brand  building  exercises and  establish  stronger brand recall in the  established  markets of  North and  Western India

OPERATIONAL & FINANCIAL HIGHLIGHTS

Aiming capacity  upgradation to the tune of 1,25,000  MTPA

Target to achieve  25%+ sales volume growth CAGR over  next three years

Value-added  product categories to provide impetus  to volumes and  profitability

Increased  market presence and improving distributor network to address demand across pan-India

Leveraging ‘APL Apollo’ brand  reach and recall  to drive higher  growth in  business