This article first appeared on GuruFocus .
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Volume:745,000 tons for Q1 FY27, below expectations.
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Gross Profit per Ton:Increased by INR1,000 quarter-on-quarter.
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EBITDA per Ton:Flattish above INR5,500 per ton quarter-on-quarter, despite negative operating leverage from a 20% volume decline.
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EBITDA Growth Guidance:Confident of achieving 20% growth in absolute EBITDA for FY27 versus FY26.
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Cash on Books:INR14 billion in the June quarter, similar to INR15 billion in March 2026.
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Working Capital Days:Remained below zero.
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July Volume:Up 20% month-on-month.
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Release Date: August 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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EBITDA per ton improved by INR1,000 quarter-on-quarter to INR5,500, driven by strong pricing power and brand positioning despite lower volumes.
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Management reaffirmed confidence in achieving over 20% EBITDA growth for FY27, with volume growth of 15-20%.
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July volumes surged 20% month-on-month, indicating a strong recovery and setting a positive tone for Q2.
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Working capital days remain below zero, with cash reserves stable at INR14 billion, reflecting strong balance sheet discipline.
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Capacity expansion plans (2 million tons over 2.5 years) and debottlenecking (1 million tons) will boost value-added product share to 75-80%, enhancing profitability.
Negative Points
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Q1 FY27 volumes fell below expectations at 745,000 tons, impacted by geopolitical issues in UAE (loss of 25,000 tons) and energy crisis in India (loss of 25,000-30,000 tons).
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SG Premium brand volumes declined due to a high price gap with secondary steel, affecting overall volume growth.
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High factory inflation led to softer construction demand, causing destocking by channel partners and delayed purchases by EPC contractors and developers.
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EBITDA per ton is expected to moderate to INR5,000-5,500 range as the company tweaks pricing to regain volumes, potentially impacting margins.
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Employee costs rose due to annual increments and lower production, adding to cost pressures in the quarter.
Q & A Highlights
Q: What is the company's guidance for FY27 in terms of volume and EBITDA growth, and how confident is management in achieving it? A: Sanjay Gupta (Chairman & Managing Director) confirmed the company is targeting 15%-20% volume growth and more than 20% EBITDA growth for FY27. He expressed confidence in achieving these numbers, stating that despite a challenging Q1, the company is targeting monthly volumes of 330,000-335,000 tons in August and 350,000-360,000 tons in September, which would put them on track to meet their annual targets.
Q: What were the key reasons for the volume decline in Q1 FY27, and what is the outlook for Q2? A: Anubhav Gupta (Chief Strategy Officer) explained that Q1 volumes of 745,000 tons were impacted by four factors: (1) UAE operations lost ~25,000 tons due to geopolitical issues, (2) SG Premium brand volumes declined due to a high price gap with secondary steel, (3) the energy crisis in India impacted rust-proof pipes and roofing products by 25,000-30,000 tons, and (4) high factory inflation led to softer construction demand and destocking. However, July volumes are already up 20% month-on-month, and Q2 is expected to be better than Q1 in both volume and absolute EBITDA.
Q: How is the company managing its EBITDA per ton despite the volume decline, and what is the expected range going forward? A: Anubhav Gupta (Chief Strategy Officer) noted that despite a 20% Q-o-Q volume decline, EBITDA per ton remained flattish above INR5,500 due to a INR1,000 per ton improvement in gross profit, driven by better pricing power. The company expects EBITDA spreads to remain in the INR5,000-INR5,500 per ton range for FY27. Looking further ahead, the target is to achieve INR6,000 per ton EBITDA at 8 million tons capacity over the next 2-3 years as the value-added product mix improves.
Q: What is the company's strategy regarding the SG Premium brand, and how does it compete with secondary steel players? A: Sanjay Gupta (Chairman & Managing Director) explained that SG Premium is a strategic tool to capture market share from secondary steel (patra) players. Its EBITDA spreads range from INR0 to INR1,000 per ton depending on market conditions. The strategy works best when the price gap between primary and secondary steel narrows to INR3-INR5 per kg, making it a "master stroke" for gaining volume. However, with the current wide gap, the brand's volume has suffered.
Q: How is the company's capacity expansion progressing, and what will be the impact on the product mix? A: Anubhav Gupta (Chief Strategy Officer) outlined that 2 million tons of new capacity will come online over the next 2.5 years, including Gorakhpur (200,000 tons), Siliguri (300,000 tons), new Malur (~1 million tons), and another 0.5 million tons in Maharashtra or North Karnataka. Additionally, 1 million tons of new capacity will come through debottlenecking. With this, the share of value-added products will increase from the current 65% to 75%-80%, further decommoditizing the portfolio and reducing the impact of steel price volatility.
Q: How is the company positioned in the pre-engineered building (PEB) segment, and is there a plan to expand into end-customer sales? A: Anubhav Gupta (Chief Strategy Officer) stated that APL Apollo holds a 65%-70% market share in the PEB segment, supplying steel pipes ranging from 150mm x 150mm to 1,000mm x 1,000mm with thicknesses from 4mm to 40mm. Large PEB companies buy directly from Apollo, while medium and small players purchase through distributors. The company is happy servicing this sector and has no plans to move into direct end-customer sales.
Q: What is the company's strategy for the solar energy opportunity, and what contribution is expected? A: Anubhav Gupta (Chief Strategy Officer) confirmed that APL Apollo has launched products to support the solar industry, which represents an addressable market of ~830 KT from 30-35 GW of annual solar additions. While current contribution is low, the company expects this segment to contribute 4%-5% of total volume over the next 2-3 years, aligning with the government's renewable energy targets.
Q: How is the company addressing the competitive intensity from upstream players like Tata Steel and Jindal expanding into pipes? A: Sanjay Gupta (Chairman & Managing Director) acknowledged that Tata Steel is adding 4 million tons of capacity in pipes, but stated that competition is "a part of life and business." He emphasized that APL Apollo's target is to maintain its 60%-65% market share, leveraging its strong brand positioning and distribution network to defend its leadership position.
Q: What explains the increase in employee costs in Q1, and how should investors view this going forward? A: Sanjay Gupta (Chairman & Managing Director) attributed the higher employee costs to two factors: the annual increment impact and lower production volumes, which increased the cost per ton. This is expected to normalize as volumes recover in Q2 and the second half of the year.
Q: When can the company expect to achieve predictable, profitable growth that is less dependent on steel price fluctuations? A: Sanjay Gupta (Chairman & Managing Director) indicated that the company is progressing steadily, having improved EBITDA per ton from INR4,000 to INR4,500, and now stabilizing at INR5,000-INR5,500. He expects that by Q4 of FY28, the company will reach a stage where profitable growth becomes more predictable and under its control, driven by the rising share of value-added products and reduced exposure to commodity price volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
