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Track record of healthy growth in volumes, margin focus and strong business moat is expected to scale the company’s business and product variants.

APL Apollo is India’s leading steel tubes manufacturer with 2,600 KTPA capacity with a growth of ~19% over the last decade. The growth in production has been ~25% CAGR over the last 10 years with a 50% market share in structural steel tubes. Capacity expansions have been via both, the organic & inorganic routes, while volume growth is driven by launch of new products buoyed by strong distribution and branding efforts. Share of value added products has now risen to 60% (40% in FY16) and is driving overall margin expansion. Acquisition of Apollo Tricoat in FY18 played a significant role in improving the company’s product profile and margins.

Expansion of the steel tube industry and increased demand for structural steel pipes to drive the volume growth.

Outlook for the structural steel-tubes industry in India remains strong, driven by government push for infrastructure, revival in real estate, and increased acceptance of steel over traditional materials. India’s National Steel Policy, 2017, aims for 300,000 KTPA of production capacity by 2030-31. The Indian market holds tremendous potential for structural steel as the government goes on an overdrive for infrastructure and real estate which throws up immense opportunities for structural steel products. Post Covid-19, demand from rural areas & smaller towns (55% of sales in H1FY21) has been strong and is likely to sustain.

Real estate and Infrastructure sector to be the core catalyst for growth, where airports development and warehousing to provide an additional boost

More than 90% of the company’s overall revenue is primarily from 2 sectors i.e. Housing and Infrastructure. Therefore, increased need for housing in the metro cities due to large influx of the immigrant population has resulted in government increasing the FSI of various areas and promote G + 20 floors type of building which can provide a huge growth potential for the Structural Steel Products (SSP). Additionally, Infrastructure sector in India has an aim to attract Rs. 100 Tn investment by 2024- 25 and majority of the amount will be spent on housing, Infrastructure, Warehousing, airports development and modernization and these industries require SSP through out the year, thus providing significant opportunities for the company. Emerging products such as Apollo Chaukhat and Apollo Column should also drive volume growth over FY21E-23E

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