Hello, hi, good evening everyone, and welcome to APL Apollo quarter three FY 2026 earnings call. I would like to take this opportunity to congratulate Team Apollo for such a stupendous performance in a quarter which had multiple headwinds such as subdued macro construction ban in Delhi NCR and falling raw material prices. If you look at our performance, I would like to highlight a few points. Number one being that the nine-month sales volume increased 11% YOY, which is well in our guidance range of 10% to 15% growth, which we had communicated in the quarter one FY 2026 earnings call. Nine-month EBITDA per ton is above INR 5,000, which has surpassed our own guidance, which we had given in quarter one earnings call.
Our strategy of pricing premiumization by leveraging APL Apollo brand has worked excellently to expand our EBITDA spreads, and the launch of SG brand in the base category worked well to compete with the smaller players in the structural steel tube segment and the sponge iron pipe players. It's been 12 months since we increased the selling price for APL Apollo branded products, which does suggest that the markets have successfully accepted our brand equity, and the premium of INR 3,000 to INR 4,000 per ton for APL Apollo brand is a new normal for the structural steel tube segment. Another highlight for the quarter three result is that we sold 375,000 tons of volume in December month, which implies the annual figure of 4.4 million tons. We have successfully tested our 5 million ton capacity as almost 90% utilization we could achieve in the December month of 2024.
We are very confident of this momentum to continue. Hence, we are upgrading our sales volume growth guidance 20% for quarter four FY 2026 and FY 2027 with EBITDA guidance of almost INR 5,500 per ton. At the same time, we are aggressively pursuing capacity expansion to 8 million tons from current 5 million tons in the next two years, which is a mix of four greenfield projects, two being in East India, one in South India, and one in West India, one being the brownfield project in Raipur for value-added products. Very interestingly, we identified the 1 million ton expansion through de-bottlenecking, wherein we identified existing mills, which could be replaced with much faster modernized mills, which will expand our ROCs to next levels because the investment over there will be very minimal.
Total investment to expand our capacity from 5 to 8 million tons is around INR 1,500 crores, and this will be funded from internal cash flows over the next two years. One thing which obviously we will be talking much more over our earnings call is the additional 2 million tons to achieve our vision of 10 million ton capacity by 2030. This incremental 2 million tons will be in the super specialty segment, wherein we are identifying various targets worldwide for the JVs with the Japanese, Korean, European and American companies to offer products in specialized segments like EV category, aerospace, petrochem, oil and gas, heavy engineering. We are already talking to a few targets. Over the next 12 months, there will be much more coming from our side.
8 million tons of structural steel tube capacity by FY 2028 and overall 10 million tons steel tube capacity by 2030. This is the vision every member in APL Apollo team is working on. We are also working on a lot of cost control measures, which Sanjay ji will elaborate later in the call, so that we are able to achieve INR 5,500 per ton EBITDA target because it's a big jump in our guidance, which we gave from INR 4,800 to INR 5,000 to INR 5,500 per ton. A lot of work has gone into giving this number to our investors. On cash flow generation, you could see that our balance sheet has a net cash surplus of INR 5.6 billion.
Most of the CapEx is behind us, and the company is throwing such large cash flows. Plus the sales run rate, what we are achieving. We are seeing a lot of opportunities to rationalize the inventory date, which right now is 30+ . It will be in 20 days range. With the strong Q4, our surplus cash on balance sheet could be INR 1,500 crores, which was always our target, that we will have as much cash on our books to match our current liabilities so that we can be a liability-free company, debt-free company. We became two years ago. We are on the verge of becoming a liability-free company. With such high inventory churn and better EBITDA spreads and volume growth, our ROC, which right now stands at 33%, it would also further expand to sub-40% levels. Things look very, very promising.
Thank you, everyone, for joining the call. We are happy to take questions now.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Hi, good evening, team, and many congratulations and great set of numbers. Just a couple of questions from my end. Did we hear it correctly that you said 20% volume growth in Q4 as well as FY 2027? I'm more concerned of FY 2027 while quarter four is understood. And secondly, what's changed between in the last, I would say, three to four months or six months where your EBITDA per ton guidance has suddenly moved up significantly, like you said, from INR 4,800 to INR 5,000 to now INR 5,500? What are the measures you are taking, or what are the developments which are happening in the product mix, which is leading to this kind of an increase in guidance?
Thank you, Sineha. Our main volume growth is coming from our strategy. We have decided we could go with the other brand also. Right now, you can say we are excellent in our segment in the market, and also we are growing our market.
[Foreign language]
What objective list otherwise we typically would bring it out shyly at the end of some questions you know so that that clearly tells me where things are so will it be will it be possible to see EBITDA of INR 3000+ crore in 2027 and am I being greedy no you are right now you are greedy Bharat bhai if you frankly you ask me [Foreign language]4. 2 million ton [Foreign language] 4.2 million ton [Foreign language] INR 5,500 [Foreign language] no no that's a very very fair answer which means 28 INR 3,000 crore in any case has to be [Foreign language] no so delighted to hear all that I heard and between what you stated and you didn't state I think this is a remarkable one but that statement about challenges [Foreign language] thank you Bharat bhai whole APL Apollo team a hearty congratulation thank you thank you Bharat bhai thank you a reminder to all the participants you may press star and one to ask a question the next question is from the line of Aditya Welekar from Axis Securities please go ahead ya thank you congratulations for the great set of numbers so my question is to [Foreign language] just a few book keeping questions on the capacity expansion front so in the last quarter's presentation we have existing capacity of 4.5 million ton so now we have 5 million ton so the increment has come from Dubai and what else apart from Dubai so so this four and half to five capacity one is super heavy we get added so that got added plus some capacity we added through de bottle necking only so the team is working very very very aggressively right to to identify that within the existing capacity how we can increase the capacities by doing small small improvements like the mill has multiple components so replacing the old component with new components the the efficiency improves so four and half to five new capacity got added by 100- 200,000 ton and rest two 300,000 ton is is through de bottle necking only okay and this specialty tubes which we were projecting earlier 0.5 million ton it will remain the same the quantum and now now we are now we are targeting 2 million ton beyond 8 million ton to reach 10 million ton 2 million ton will be specialty tubes earlier it was 1 million ton now we have increased it to 2 million ton because as we have started working as we have started working so we are identifying lot of areas where our company can work upon ya so what gives us I mean if you can throw some use cases and demand points that we are now projecting higher capacity additions so anything on that front so from five to eight journey right 2 million ton consists of four green field plants one in Gorakhpur another one in Siliguri third one in new new Malur which is in South India and fourth in Bhuj so these are the four green field plants and and one brown field expansion in Raipur for value added products so this put together will add 2 million ton over 5 million ton and 1 million ton again through de bottle necking we are going to increase and and the green field plus brown field expansion will require INR 1,300 crore and de bottle necking expansion will require INR 200 crore ya my question was on demand drivers means we are expanding the capacity so from demand perspective do you see that means from an overall perspective because last few call we have seen there was some substitute demand yes no no demand is not substitute we are selling the material in one segment now we are spread our self now what I last [Foreign language] starting [Foreign language] now we are actual in the market we are able in the market we are not going to spread anything [Foreign language] capacity full [Foreign language] we are very clear so so what Sanjay ji saying is that APL Apollo brand is the highest selling price point SG brand is at the lowest selling price point correct so that way we have captured the market heavily second see all these expansion which are coming no so East India we are not selling our product in East India because we don't have any plan as yet so Gorakhpur and Siliguri will cater to all the new virgin market for APL Apollo then Bhuj Bhuj is for export market again again the the again the segment where we have been lagging behind new Bangalore Malur project right there the capacity for the existing product is already fully utilized so we are adding new capacity so whatever new capacity is coming either it is for new areas and the products which are fully utilized as on date and third the the roofing the value added products in Raipur even Raipur plant today the capacity utilization has reach 70% okay in in quarter three so so one year down the line we also need to reinvest again in Raipur to expand the capacities because the demand for some of the products is very very strong so so so we are just gearing for that so there is 2 million ton of incremental capacity it's not going to cannibalize existing sales it's it's on three point ya it's on three point fundamental new market new product 1 million ton [Foreign language] we are coming this is this is overlap this will be overlap yes but then the market will increase assuming India construction growth is 7%-8% year on year so that much market will increase that's very good to hear thanks and all the best thank you the next question is from the line of Omkar Ghugardare from Shree Investment please go ahead congratulations good set of numbers I just wanted to know this specialty tubes which you are talking about from FY 2028 to FY 2030 what kind of like EBITDA per ton is there you can give a range that would be fine so so if you look at the specialty tubes some of the Indian companies are present and some of the global companies which we are studying the EBITDA spreads are in the range of INR 10,000 to INR 15,000 per ton it will depend like what kind of product segment we get into it's a bit early to to comment in next two three quarters we will have much more clarity that which global partner which segment we are tying up with and but yes whatever we do it should be above INR 10,000 per ton EBITDA and here you are talking about JVs right in the international markets ya that's right because super super specialty products now if we if we if we build this capacity in house in India it will take time so partnership with the global player always put things on fast track and we can capture pretty quickly okay thanks second one is on the the capacity you mention I guess you will be doing around 3.6 million ton this year and then 4.2 4.3 million ton in FY 2027 so is the understanding correct yes very correct minimum 4.2 million ton minimum okay and you are talking about INR 5500 of EBITDA per ton right yes minimum okay this is minimum you are talking about and then with all the efforts you are doing and with the free cash you will be generating what kind of ROC you are targeting it it it can it could hit 40% how in FY 2027 right 40% [Foreign language] so optically right on and it was network [Foreign language] as on date INR 5000 crore INR 5000 crore [Foreign language] average [Foreign language] INR 6000 [Foreign language] INR 6000 [Foreign language] 40% 40% so 40% is what you can see within FY 2027 okay and like the free cash flow which you will be generating you are like you will be using that to reduce the working capital days and like you will be giving out some extra dividends like increasing your dividend payout as well in your ya we are going to some increase the some dividend payout surely no doubt like right now we are [Foreign language] we achieve the our targets what we are thinking [Foreign language] right now we are going with minimum 20% of dividend payout policy we increase to 25% minimum okay alright thank you thank you the next question is from the line of Abhishek from DSP Mutual Fund please go ahead hello am I audible yes please proceed ya sir congratulations for great set of numbers [Foreign language] as far as steel mills are concern so is that sourcing advantage already built [Foreign language] if there is a market tail wind there can be upside to this number yes [Foreign language] okay sir thank you so much initially thank you thank you the next question is from the line of Darshan Mehta from Axis Capital please go ahead yes sir and thank you for taking my question sir [Foreign language] my question was also on the similar line [Foreign language] when we target for INR 5500 per ton EBITDA so what what HRC price are we working with for this unitary EBITDA no Darshan so HRC is pass on for us right so there is no assumption on HR coil pricing whatever price is up and down it will it will be fully pass on to our customers so we are able to fully pass on like there is no absorption that we we have to take in our boost we are able to fully pass on to the to the end country that's right that's right okay okay and sir just one one more thing when in terms of consolidation of the capacity Foreign language] in the presentation is given that two of for this 2 million ton green field capacity Raipur would be close to 0.6 million ton however my understanding is this Raipur plant is for debottle right it doesn't fit in to the green green free capacity so within Raipur plant no no within Raipur same land same land parcel there will be new sheds coming up new machinery coming up for 6 lakh ton okay okay so so this Raipur for 0.6 million ton is purely green field and then for can you give the breakup of this de bottle making capacity of this 1 million ton that will be across the plants Darshan that will be across the plants okay that would be across the plants okay and one more question is on the so we saw increase in interest cost this quarter however I think that our total debt quarter on quarter which you give in the presentation has decrease so just wanted to know why did we see this increase in overall interest cost so it is so Darshan if you see like the the debt we have on the books right the gross debt let's not talk about the net debt if we talk about the gross debt on March 25 it used to be around INR 600 crore INR 615 crore okay March 25 and nine months we close that INR 548 crore okay that's the gross debt on the books so so because there was interest rate movement during the year this is what it is and some bank charges because of because of bill discounting etcetera we do so some increase in interest cost because of that so basically you are saying also overall debt has gone down basically there are some bank charges as well as may be increase in overall borrowing rate which has basically like ya so so as we are going to have a lot of cash flow generation during quarter four I mean from quarter one FY 2027 onward this interest rate will reduce drastically down to almost zero levels okay and just one two more question if I can me so first first was on this consolidated tax rate can we can we assume a lower tax rate going ahead once this Dubai facility comes into play already I think we are at now at 22%-23% would there be any more reduction in tax rate going forward once this Dubai you know Dubai plant keeps running like it once it is on stream so so Darshan both Dubai and Raipur plants are at low tax rate because Raipur we started in 2018 under that scheme when the government gave tax benefits for the new ventures so eventually we expect our tax rate to be around 20% okay when the contribution from both Dubai and Raipur will be at its peak okay so can I say FY 2028 would see more like 20% tax rate and yes okay okay and ya I think done with my questions and congratulations on the numbers sir thank you thanks Darshan thank you the next question is from the line of Sanjoy Nandi from VT Capital please go ahead hello ya congratulations sir on good set of numbers sir just a broad vision picture kind of like as we are heading for 10 million ton by 2030 from five as we talk so which of the industries where we can expect the green shoots from so from five to eight we are betting on our existing industry which is structural steel tubing which is linked to the construction across the country for residential for commercial government government infrastructure real estate private construction has been on a slow track for last two two and half years because of various reasons but next three four years look very promising and the government spending on infrastructure once it kick starts then then also there will be a lot of tail winds coming in so we are very bullish on the on the construction and infrastructure spending over the next three four years so five to 8 million ton is the existing structural steel tubing and beyond 8 million ton to reach 10 million ton that is for the special segments new emerging categories like EVs and aerospace and highly mechanical engineering petrochemical and oil and gas segments that we will that we are still evaluating and studying may be in two three quarters time we will have a fine blueprint that how we are going to cater to this segment so sir in the specialist segment also we are planning for the structural steel supplying the structural steel right which one in the specialist field also we are planning to supply the structural steel right in the respect of the segments no that won't be structural steel that will be that will be non structural like round pipes [Foreign language] coated pipes [Foreign language] like titanium pipes structural structural structural steel tubes don't require that kind of specialty segment ya so that's it from my set sir wish you all the very best thank you so much thank you the next question is from the line of Harsh Vasa from SBI Capital Securities please go ahead ya first of all congratulations on the great set of numbers to the entire EPL Apollo team and thank you for the opportunity so my question was that like currently we have a capacity of 5 million tons at the end of FY 2026 so by the time of FY 2027 so what would be our like exit capacity at the end of FY 2027 and what would be our FY 2028 like volume growth like if you can tentatively give like ball park number from FY 2027 by FY growth so so so FY 2026 the exit capacity will be 6 million ton FY 2028 target is 8 million ton right so almost 3 million ton will come in 24 months from April 26 to March 28 okay now now exact number you can assume like six six and half million ton could be six 6.25 million ton could be as at FY 2027 and 8 million ton by FY28 but majority of the capacity will come in FY 2028 because these are the green field plants we are setting up so so bulk of that will start coming from Q1 of FY 2028 and as far as the volume growth for FY 2028 so so the guidance is that we should continue 20% we should maintain 20% growth rate for FY 2027 and FY 2028 okay okay thank you thank you the next question is from the line of Radha from B&K Securities please go ahead Radha please proceed with your question did you know response we will take the next participant the next question is from the line of Prashant Sharma from JM Financial please go ahead ya so my question is regarding this new safeguard duty that have come in to play in December so what was the impact of that on the APL Apollo no impact on Apollo except the fact that our raw material prices went up but that is fully pass on so so no impact as such okay thank you that's all from my end thank you the next question is from the line of Ajit Shetty from Quantum Securities please go ahead thanks for the opportunity as we will be doing L1 going forward so do we expect any realization hit going forward so this is going to be a very small part of the business you saw that contribution in Q2 and Q3 also and we still maintain the EBITDA spread of INR 5200 per ton so we so whatever projection guidance we are giving in we have built in the volume from from from low category brand okay thank you thank you the next question is from the line of Mudit Bhandari from IIFL Capital please go ahead hi sir just one question in SG Premium I think you said INR 1,500 to INR 2,000 is the EBITDA per ton so what kind of volumes did we make in 3Q FY 2026 and is there any if we want to increase those volumes would there be any additional assembly line and machinery different from what we are using would be required machinery is almost same we are doing almost 60- 70,000 ton per ton turn in quarter Q3 I depend on the our balance product mix sales if my sale is less in the other my premium products may be I go for INR 1 lakh ton in a quarter we have not no problem at all because machinery is same I hope this answers your question can we take next one please thank you the next question is from the line of Pallav Agarwal from Antique Stock Broking please go ahead ya good evening and congratulations on the record quarter so couple of questions one is you know with the safeguard duty and HRC prices going up are we seeing some restocking demand happening in the quarter so that can lead to better volumes very minor Pallav because it's too early for channel partners to act on this once there is more more clarity on how prices will behave then restocking should start okay the other question you know was on the purchase of stock in trade so in some quarters you know it is a pretty high number so even this quarter it's about INR 329 crore so is this hello hello did you know response we will take the next participant the next question is from the line of Omkar Ghugardare from Shree Investments please go ahead ya I just wanted to know with the recent upside in the all the commodities I mean will there be any impact on the guidance which you have given I mean you can not comment on the revenue front but what would be your prediction on that sorry say it again prediction on what prediction on overall guidance which you have given of 20% volume growth I mean where do you see the trajectory of commodity prices and how much it can impact your overall revenue so we don't factor in how steel prices will behave because there is no major where we can have clarity while while working on our business plan for next two years we work on a simple fundamental that whatever increase and decrease in raw material prices we get we immediately pass it on to our customers and and this we have been doing for many years now and our channel partners our network of 800 distributors has also kind of got used to this model and not only us but our competitors also work on the same fundamental so industry has adopted this that that the increase and decrease in raw material prices should be easily pass on to the customers so generally how much is the lag in that five to eight days oh just five to eight days that's right so practically speaking there should be no impact because of the commodity steel prices and the commodity price increase if it sustains like this ya ya unless there is a drop and increase of like 10% and more in a single quarter right which happens like once in 10 years so so last year we had this impact but we don't expect this to come again such sharp increase and decrease again during this decade at least okay less than that is is easily pass on right as you said within the same quarter and may be in seven eight days ya ya that's right that's right okay alright no problem thank you very much thank you the next question is from the line of Kumar Saumya from Ambit Capital please go ahead hi [Foreign language] just one question from my side I just trying to understand maths here the market is roughly 10 to 12 million ton assuming 55% is your HRC coil based that implies 5 and half to 6 and half million ton now based on 20% guidance you would be touching 4 and half million ton next year and as if I remove 200,000 ton for SG Premium and 300,000 ton for Dubai you are left with 4 million ton for domestic market so that implies 65% market share and your competition is also planning for capacity addition so how comfortable are you with this volume so Kumar 65% market share we have been maintaining for almost four years now after COVID before COVID we were at 40% now after COVID from 2021 straight into 25 as we enter in 26 we are above 60% Sanjay you want to add to this ya and number two Kumar [Foreign language] what ever the price may be price is less then HR coil and may be price is less then patra may be price is less then anything so sir in this guidance of 4 to 4.5 what is the estimate that SG Premium will come on in terms of volume share three to 4 lakh ton [Foreign language] under 10% Kumar under 10% okay okay thank you sir that will be all from my side thank you thank you thank you very much as there are no further questions from the participants I now hand the conference over to the management for the closing comments thanks Kumar and Ambit for hosting Apollo for its quarter three earnings call and thanks to all the participants who drop by look forward to see you again during Q4 FY 2026 earnings call thank you so much thank you very much on behalf of Ambit Capital Limited that concludes this conference thank you for joining with us today and you may now disconnect your lines.