APL Apollo Tubes (533758) Q4 19/20 earnings summary

Executive summary

• FY20 consolidated revenue rose 8% YoY to ₹7,723 crore; EBITDA grew 23% to ₹500 crore and profit after tax increased to ₹256 crore, including ₹18 crore attributable to non-controlling interests.

• Sales volume increased 22% to 1.63 MnT despite muted demand, floods in key markets and the COVID-19 shutdown in late March.

• The year included the acquisition of control of Apollo TriCoat, capacity expansion to 2.5 MnT and stronger balance-sheet metrics.

Financial highlights

• Consolidated revenue from operations reached ₹7,723 crore vs ₹7,152 crore in FY19; EBITDA was ₹500 crore vs ₹405 crore.

• Consolidated profit after tax was ₹256 crore vs ₹148 crore; profit attributable to owners was ₹238 crore, with EPS of ₹97.17 vs ₹62.47.

• Q4 FY20 revenue was ₹1,889 crore, EBITDA ₹128 crore and net profit after minority interest ₹57 crore; sales volume declined 4% YoY to 400,616 tonnes.

• FY20 operating cash flow was ₹510 crore consolidated; capital expenditure was ₹301 crore in reported capital highlights.

• Lower tax rates boosted earnings: consolidated deferred tax credit included a ₹33.68 crore reversal of deferred tax expense after adoption of the 25.168% tax rate.

Outlook and guidance

• FY21 was expected to remain challenging, with subdued performance; gradual improvement was anticipated from Q2 FY21 as domestic markets reopened.

• FY21 H1 was expected to focus on pandemic-related disruption, with decent volumes anticipated in H2 as user sectors resumed operations.

• Capex intensity was planned to be scaled down over the next two years, prioritising cash preservation, debt reduction and utilisation of existing capacity; limited capex would support value-added products.

• Over 12–24 months, performance was expected to improve; longer-term margins were expected to benefit from value-added products and Apollo TriCoat contributions.

• Large-diameter pipes were targeted to reach 15–20% of sales volume over 3–4 years, from a current 7–8%.