Market leader stock jumps 3% after reporting 300% QoQ increase in net profit

The shares of the company’s largest structural steel tubing company gained up to 3 percent after the company’s net profit and revenue increased by 301 percent and 13 percent QoQ respectively in Q3FY25. 

With a market capitalization of Rs 44,020.95 crore, the shares of APL Apollo Tubes Ltd were trading at Rs 1,586.20 per share, increasing around 1.15 percent as compared to the previous closing price of Rs 1,568.20 apiece. 

Reason for rise 

The shares of the company have seen positive movement after APL Apollo Tubes reported positive results in Q3FY25, revenue increased by14 percent on a quarter-on-quarter basis from Rs.4,773. crore in Q2FY25 to Rs.5,432 crore in Q3FY25. Further, revenue increased by 30 percent year on year, from Rs 4,192 crore in Q3FY24 to Rs. 5,432 crore in Q3FY25. 

The company’s net profit increased by 300 percent on a quarter-on-quarter basis, from Rs. 53.81 crore in Q2FY25 to Rs. 216.57 crore in Q3FY25. Further, net profit magnified significantly by 31 percent year on year from Rs. 165 crore in Q3FY24 to Rs. 216 crore in Q3FY25. 

Market Position 

APL Apollo Tubes Limited is indeed recognized as a market leader in the tube manufacturing sector in India. The company has achieved significant market dominance, capturing approximately 55% of the market share in FY2024, which includes both organized and unorganized segments of the industry. 

APL Apollo Tubes Ltd is actively aiming to capture 60% of the market share by FY 26 in the Indian tube manufacturing sector. The management has expressed a clear vision and strategic initiatives to increase this share, leveraging its strong distribution network and innovative product offerings to enhance its competitive position in the market. 

Market dynamic 

Management stated that current steel pricing is likely sustainable, with minimal room for further declines as steel mills face low profitability and new capacities emerge. Th expect robust volume growth in H2 FY25, aiming for a total sales volume of 3.2 million tons for the year. 

Capacity and Expansion Plans 

APL Apollo operates at a 4.3 million ton capacity, targeting 5 million tons by FY26 with ₹3–3.5 billion in CAPEX funded through internal cash flows. New Greenfield plant Siliguri, Gorakhpur, and Bangalore will support East and South India markets, adding 1.5 million tons annually.

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Margin Guidance 

Management reaffirms a sales volume target of 4 million tons for FY26 and 5 million tons by FY27, projecting EBITDA margins to normalize to ₹5,000 per ton over the next 2-3 quarters. They express confidence in maintaining sustainable margins through FY26, supported by steady demand and operational efficiency. 

Competitive Landscape 

Management noted rising competition in the heavy structural segment, especially from JSPL, but expressed confidence in their strong branding and distribution network to preserve market share. They believe that increased competition will broaden the overall market rather than adversely impact their business. 

Inventory and pricing strategy 

In Q2, the company faced an inventory loss of ₹2,000 per ton due to a ₹7,500 per ton steel price drop, affecting profitability. To boost sales, they offered a ₹500 per t discount but plan to retract this as prices stabilize. 

Company Profile 

APL Apollo Tubes Limited is engaged in the business of production of electric resistance welded (ERW) steel tubes. Its multi-product offerings include over 1,100 varieties of pre-galvanized tubes, structural steel tubes, galvanized tubes, MS black pipes, and hollow sections. 

Written by Abhishek Singh

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