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Result Synopsis

Apollo Pipes Ltd (standalone) volumes remained flattish at 20,937Te (2-year volume CAGR stood at 20%). The volumes were flattish owing to lower demand for HDPE pipes which constituted ~15% of volumes in previous quarter and the same in Q1FY25 was <5%. However ex-HDPE, plastic pipe volumes grew by 10%YoY. Standalone EBITDA/Te stood at Rs11.6 as compared to 12.3/12.1 in Q1FY24/Q4FY24 respectively. In Q1FY25, company consolidated the performance of Kisan Mouldings (subsidiary) which was acquired in Q4FY24 to expand the presence in west India. Kisan volumes stood at 5,625Te and the same turned profitable (after FY20) with EBITDA of Rs50Mn on account of change in product-mix towards fittings. Management believes that with improving demand, Apollo’s revenue should grow by 25%YoY in FY25E and Kisan should contribute incremental Rs4-5Bn. With new Varanasi plant of 30,000Te which is expected to commence operations from Q4FY25, O-PVC pipes, windows & doors coupled with brownfield expansion of 28,500Te, company aims to reach a turnover of Rs26Bn by FY27E. Apollo’s standalone EBITDA margins are likely to remain capped at ~10% owing to higher capex cost, Kisan’s margins will improve gradually to 10% with better product mix and higher utilizations. We have incorporated Kisan Mouldings contribution to our overall estimates. Hence, we expect revenue growth of 40% for FY25E wherein Apollo’s standalone biz is likely to grow by 12%YoY. Over FY24-FY26E, we reckon Revenue/EBITDA/PAT to grow by 33%/31%/40% respectively. We believe operating margins will be ~9.5% over similar period. At CMP, the stock trades at P/E(x) of 31x on FY26E EPS of 20.2 (adjusted for revised share capital), we continue to value the company at P/E(x) of 35x on FY26E EPS, arriving at a target price of Rs709. Hence, we maintain our ADD rating on the stock.

Result Highlights

* Standalone revenue stood at Rs2.40Bn, a decline of 8%YoY & 7% below estimates (2-year CAGR stood at 5%).

* EBITDA margins (standalone) came in at 10.1% which was similar to Q1FY24 & Q4FY24 margins. Absolute EBITDA, declined by 7%YoY.

* Net profit (standalone) declined by 22%YoY to Rs109Mn, on account of higher depreciation and finance cost.

* Q1FY25 consol nos include the acquisition of Kisan Mouldings which is now a subsidiary of APOLLO PIPES Ltd. Owing to the same, Q4FY24 & FY24 numbers have been revised and only 5-6days of operations have been consolidated. Hence the Q1FY25 Vs Q4FY24 consol numbers are not comparable.

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