APL Apollo Tubes Q2 Volume Rebound Falls Short of FY27 Targets

Despite the volume uptick, the stock declined approximately 3% following the results, reflecting investor concerns over whether the company can meet its annual growth targets. Headwinds from rising hot-rolled coil (HRC) prices have made distributors cautious about building inventory, though profitability may remain stable.

JM Financial Institutional Securities projected Q2 EBITDA to hold steady at around ₹5,500 per tonne, consistent with Q1 levels, which had risen 11% year-on-year to ₹410 crore despite lower volumes, as management prioritised margin protection over growth.

Regional performance showed weakness in the UAE, where volumes dropped 55% due to West Asia disruptions. Excluding the UAE—which accounted for 6% of FY26 volumes—overall Q2 volume growth would have been 18%. Meanwhile, the company’s low-priced SG Premium brand saw a 30% volume decline in Q2 after a more than tripling in Q1, facing increased competition from unorganised players.

APL Apollo is expanding capacity from the current 5 million tonnes per annum (mtpa) to 8 mtpa over the next 2-3 years via greenfield projects and debottlenecking. Two plants with a combined capacity of 0.5 mtpa in the eastern and north-eastern regions are expected to be commissioned in Q3FY27, enhancing regional reach.

Management expects earnings to improve by FY28 as the share of value-added products rises from the current 65% to 75-80%, reducing sensitivity to steel price volatility. Emerging opportunities in solar-related applications, though currently small, could contribute up to 5% of revenue over the next 2-3 years.

APL Apollo’s shares were trading at a FY27 price-to-earnings ratio of 41 times, according to Bloomberg. The company’s near-term trajectory will depend on sustaining volume growth—including contributions from new capacity—and protecting margins amid elevated input costs.