Event Participants
Executives
4 Sameer Gupta (Managing Director), Arun Agarwal (Joint Managing Director), A.K. Jain (Chief Financial Officer), Anubhav Gupta (Group Chief Strategy Officer)
Analysts
8 Aasim Bharde (DAM Capital), Ameya (Value Equity), Karan (AM Tech), Neha (Nuvama), Roshan (Antique Stock Broking), Sagar Pamnani (Bajaj Alternate), Shaurya Shah (Equirus Securities), Sneha (Nuvama)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Sales Volume | Flat YoY | April down 30% on PVC price crash; May-June recovery; July decent |
| Consolidated EBITDA Margin (Normalized) | 7% | Ex-inventory write-downs; Apollo standalone 8%, Kisan standalone 6% |
| Apollo Standalone EBITDA Margin | 8% | Impacted 0.5% by Varanasi ramp-up and Window profile team costs |
| Kisan Standalone EBITDA Margin | 6% | Business-level EBITDA 5-6%; P&L optics hurt by inventory losses |
| Inventory Days | 80 days | Unchanged from FY26 end; soft volumes in last 6 months |
| Debtor Days | 30 days | Stable; cash-and-carry schemes working in strong markets |
| Net Working Capital Days | 45 days | Target 30 days; 10-15 day release expected by FY28 |
| Varanasi Plant Revenue Capacity | ₹300 crores | Target 30% utilization in FY27, 50-60% in FY28, 70% in FY29 |
| Kisan (Tarapur) Quarterly Volume | ~5,500 tons | Flattish 4 quarters; touched 7,000 tons in Q4 FY26; capacity 8,000-8,500 tons |
| CAPEX (FY27 + FY28) | ₹200 crores | ₹100 crores each year; funded from operating cash flow |
| Long-term Revenue Target (FY31) | ₹5,000 crores | 4 plants × ₹800-1,000 cr (pipes) + ₹1,000 cr (new products) |
| Target EBITDA Margin (FY31) | 10-12% | Implies ₹500-600 cr EBITDA on ₹5,000 cr revenue |
| Target ROC (FY31) | 25% | Gross block ₹1,500 cr + WC ₹300-400 cr = ₹1,800-1,900 cr capital employed |
| Window Profile Revenue Target (FY27) | 7-8% of revenue | Ramping to 10% at full capacity; potential 15% of portfolio |
| New Product EBITDA Margin Target | 10-15% | Window profile, water tanks, solvents, bath fittings; 25% ROC hurdle |
| CPVC Volume Growth (Q1) | Positive YoY | Grew despite flat consolidated volume; Lubrizol co-branding showing results |
| Water Tank Volume Growth | Double-digit | Only segment with strong growth in Q1 |
| Government Infra (O-PVC/HDPE) | Near zero | Major drag on overall volume; budget disbursements delayed |
| Fittings Volume Growth | Single-digit | Resilient through tough 5 quarters |
| Bath Fittings Volume | Flat | No growth in Q1 |
| MIP on PVC Resin | $766/MT (~₹82/kg) | Imposed 12 days prior; provides price floor; market at 1-2% premium |
| PVC Resin Price Drop (April) | ₹32/kg | 30% decline in first 20 days; additional ₹5/kg drop in June |
| Company Net Cash Position | Near net cash | ₹500-600 cr CAPEX last 2-3 years funded internally + promoter/foreign fund |
Geographic & Segment Commentary
North India (Secunderabad Plant): Mother plant serving North; stable base but volume growth dependent on construction cycle recovery post-monsoon.
West India (Kisan Tarapur Plant): Maharashtra, Gujarat, MP focus; quarterly volume flattish at 5,500 tons vs 8,000-8,500 tons capacity; Q4 FY26 touched 7,000 tons; brand integration with Apollo distributors in South/North underway; team rationalization and plant consolidation completed; expecting QoQ improvement from Q2.
East/Central India (Varanasi Plant): UP, Bihar, Odisha coverage; ₹300 cr revenue capacity; commissioned recently; 30% utilization target for FY27; early traction from Q2; key driver for FY28-29 growth.
South India (Bangalore Plant + Greenfield): Current small Bangalore plant insufficient; land parcels identified for large greenfield plant; acquisition targeted FY27, construction from Q2 FY28; contingent on Varanasi and Maharashtra ramp-up milestones.
PVC Pipes & Fittings (Core): 60% construction, 40% agri; CPVC growing YoY on Lubrizol tie-up; fittings single-digit growth; overall volume flat YoY in Q1 due to April price crash and near-zero government infra orders.
New Products Portfolio: Window profiles (D2C, 7-8% revenue target FY27), water tanks (double-digit growth), bath fittings (flat), solvents; combined target ₹1,000 cr revenue in 4 years at 10-15% EBITDA margins.
Government Infrastructure (O-PVC/HDPE): Near-zero contribution; Nal Se Jal budget disbursements delayed 3-4 months; potential pickup in H2 FY27 but not yet visible.
Company-Specific & Strategic Commentary
Varanasi Ramp-up & Capacity Expansion: ₹300 cr revenue capacity plant commissioned; phased utilization targets (30%/50-60%/70% over FY27-29); brownfield expansions ongoing; South India greenfield (~₹600-700 cr next leg CAPEX) land identified, decision pending Varanasi/Maharashtra traction.
Kisan Turnaround & Merger: Scheme filed for amalgamation; operational synergies largely captured (single RM sourcing, shared finance/tech); 1% cost synergy at company level post-merger; Tarapur plant focus, brand cross-leveraging with Apollo network; volume inflection expected Q2 onwards.
Window Profile D2C Launch: Direct-to-consumer model with dedicated ground team; 7-8% revenue contribution target FY27, 10% at full capacity; 10-15% EBITDA margin profile; capacity expansion planned post 100% utilization.
CPVC Premiumization via Lubrizol Alliance: Co-branding/co-marketing driving YoY volume growth in Q1; expected major contributor to high double-digit volume target; leverages APL Apollo group branding.
Working Capital Optimization: Target 30 net WC days (from 45) via inventory churn (80→lower days), debtor reduction (30→25 days via cash-and-carry expansion South/West), and creditor term improvement with scale; ₹300-400 cr release potential.
Capital Allocation Discipline: Near net cash; ₹200 cr CAPEX FY27-28 internally funded; next ₹600-700 cr over 5 years 70-80% internal; 25% ROC hurdle on all investments; no debt/equity raise needed for current plan.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Volume Growth | High double-digit YoY | Q1 flat, Q2 double-digit YoY, H2 strong on post-monsoon construction pickup and price stability |
| Q2 FY27 Volume Growth | Double-digit YoY | Explicit confirmation; base effect + demand recovery + channel restocking |
| Near-term EBITDA Margin (12-15 months) | 7-8% consolidated | Current normalized run-rate; 50-100 bps upside as Varanasi/Window stabilize and volumes scale |
| Varanasi Utilization FY27 | 30% of ₹300 cr capacity | Q1 not representative; traction from Q2; 50-60% FY28, 70% FY29 |
| Kisan (Tarapur) Volume | QoQ improvement from Q2 | Target 8,000-8,500 tons/quarter capacity; brand integration and team rationalization done |
| CAPEX FY27 + FY28 | ₹200 crores (₹100 cr each) | Pending Varanasi, brownfield, new products; South India land acquisition FY27, build FY28 |
| Window Profile Revenue Share FY27 | 7-8% | Ramping to 10% at full current capacity; 15% long-term potential |
| Government Infra Orders | Pickup in 3-4 months | Nal Se Jal budget disbursement cycle; not yet visible but expected H2 FY27 |
| FY31 Revenue Target | ₹5,000 crores | 4 plants × ₹800-1,000 cr (pipes) + ₹1,000 cr (new products) at 10-12% EBITDA, 25% ROC |
| Kisan Merger Cost Synergy | 1% at company level | Post-amalgamation; operational synergies (RM, finance, tech) largely captured already |
Risks & Constraints
| Risk | Context |
|---|---|
| PVC Resin Price Volatility | Q1 saw ₹37/kg total drop (₹32 in April, ₹5 in June) causing inventory write-downs and demand destruction; MIP at ₹82/kg provides floor but global supply chain disruptions (geopolitical, port rains) create uncertainty; channel partners cautious on restocking until 10-15 days of stability |
| Monsoon & Construction Cyclicality | 60% revenue from construction; Q1 April worst, May-June recovery, July decent but monsoon peak softens next 15-20 days; H2 dependent on post-monsoon pickup; any extended rains delay recovery |
| Government Infrastructure Delay | O-PVC/HDPE near-zero in Q1; Nal Se Jal disbursements 3-4 months behind budget; major drag on volume; no visibility on tender pipeline yet; FY27 targets assume H2 pickup |
| Kisan Integration Execution | Despite operational synergies, volume stuck at 5,500 tons/quarter for 4 quarters vs 8,500 capacity; brand cross-sell and distributor integration unproven at scale; merger accounting benefits not yet in P&L |
| Working Capital Pressure | Inventory at 80 days, net WC at 45 days vs 30 target; release dependent on volume recovery (Q2 onwards) and supplier terms improvement; debtor reduction to 25 days requires cash-and-carry adoption in new geographies |
| Small Player Disruption & Competitive Intensity | Volatility hurts smaller players (inventory losses, balance sheet stress); Apollo gaining share but aggressive pricing to maintain volume caps near-term margins at 7-8%; 10%+ EBITDA needs scale/operating leverage |
| South India Greenfield Timing | Land identified but no committed timeline; contingent on Varanasi (30% utilization) and Maharashtra (volume inflection) milestones; delay pushes ₹1,000 cr new product revenue target |
Q&A Highlights
PVC Pricing & MIP Impact
- Question: Impact of recently imposed