Apollo Pipes Ltd
NSE:APOLLOPIPE
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Apollo Pipes Ltd
Earnings Call Analysis
Summary
Q1-2025
Apollo Pipes reported a 25% increase in sales volume to 26,500 tons, driven by the Kisan acquisition. However, excluding Kisan, growth was flat due to a decline in government infrastructure business. EBITDA rose 11% YoY with a 10% margin, though consolidated profit fell 10% due to higher depreciation. Kisan turned profitable, adding significantly to the company’s performance. Apollo aims for a 25-30% CAGR in revenue over the next four years and targets 25-30% ROCE despite ongoing investments. Key growth projects include a new PVC-O pipes line, two additional lines by end of FY25, a uPVC doors and windows project, and a Varanasi plant expansion adding 40,000 tons capacity. The balance sheet remains debt-free.
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Ladies and gentlemen, good day, and welcome to Apollo Pipes Limited Q1 FY '25 Conference Call hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, Mr. Manish.
Thank you. On behalf of Antique Stock Broking, a warm welcome to all the participants on the Q1 FY '25 earnings call of Apollo Pipes. Today, we have Mr. Sameer Gupta, Chairman and Managing Director; Mr. Arun Agarwal, Joint Managing Director; and Mr. Ajay Kumar Jain, CFO, on the call. Without any delay, I would like to hand over the call to Mr. Gupta for opening remarks. Post which, we will open the floor for Q&A. Thank you, and over to you, Mr. Gupta.
Good morning, everyone, and thank you for joining us on our Q1 FY earnings call to discuss the operating and financial performance. I urge everyone to look at our financials on consolidated basis that is including Kisan financials at -- as it has become our integral part of Apollo Pipes. Our strategy is to cover whole of West India and some of Central India through 3 plants of Kisan. Our sales volume increased 25% to 26,500 tons. You may see that the volume was flat Y-o-Y excluding Kisan, mainly because of decline in government infrastructure business which is catered by HDPE sales. This was due to elections and late budget. The EBITDA for the company increased 11% Y-o-Y with 10% margin profile. We are glad to share that Kisan turned profitable after many years. The consolidated profit declined 10% Y-o-Y due to higher depreciation. We are confident that there will be solid recovery in North and South markets in coming quarters on the back of brownfield capacity additions.
In terms of other updates, we started the first line for PVC-O pipes in Q1 FY '25, which is a highly profitable product. This has placed Apollo Pipes among top companies in India to cater such a product segment. Two new lines will be coming -- will become operational by the end of FY '25. Our another project to add uPVC doors and windows profiles is on track, which will further strengthen APL Apollo presence in the housing building segment -- building materials segment. Varanasi expansion is on track, which will add 40,000 tons to our overall capacity.
With this plant, we will have a Pan-India presence. Total CapEx is around INR 150 crores. I'm glad to share that our balance sheet remains debt free despite such commitments. Our financial and sales team have worked wonders to improve working capital through 30 days. We look forward to achieve revenue growth of 25% to 30% CAGR for the next 4 years. We are also confident of hitting 25% to 30% of ROCE despite these proposed investments supported by working capital efficiencies. This is from our side. Now we are glad to take questions. Thank you.
[Operator Instructions] The first question is from the line of Keshav Lahoti from HDFC Securities.
Sir, just want to understand on stand-alone, what is the stand-alone current volume number?
20,900.
Okay, 20,900. Got it. Just want to understand what are your future plans for Kisan? What are the other levers, how margin of Kisan would be improved? It's heartening to see Kisan EBITDA-positive after many years.
So if you see that Kisan did a revenue of INR 65 crores in quarter 1. One needs to look at the quality of this revenue, right? If you look at last quarter of FY '24, the number was much higher. But at that point of time, the company was mainly doing project business, which was they were taking advances from the project contractors, and then they were just doing OEM kind of business. That was the majority of sales volume what the company was doing. And you can see that, that was not profitable also, at the operating level, the company was making losses. But since we took charge of the company in April, our focus has been on the trade sales and to leverage the Kisan brand, and also our own experience of building a strong distribution network in the plumbing pipes. So that's why you could see the EBITDA of INR 5 crores for the quarter, which would be after many years of business operations, you would appreciate that. Going forward, we want to take this sales for Kisan to INR 450 crores to INR 500 crores in the current financial year. That's what our target is.
Then in the following year, take it to around INR 600 crores to INR 650 crores and eventually around INR 750 crores to INR 800 crores by FY '27, with 10% of EBITDA margin. To achieve these numbers, we don't see much of investments apart from what we already did in Kisan. There will be some brownfield CapEx for the plant modernization, but we don't see much of investments going into that. And given that the focus is on quality sales in trade channel, the working capital requirement also will be as per the industry norm, between 30 to 40 days, which can also be funded from the bank limits, now we are working with Kisan. So we -- in the Q1, we already started working on implementing the SAP, which will help for the rationalization of purchase and sales, et cetera. And our team, including top management is spending a lot of time in Kisan plants to ensure that the quality matches as per the Apollo standards and also changes in the mid-level and low-level team at Kisan plants to boost up the production and sales in the coming quarters.
Understood. That is helpful. 10% EBITDA guidance is for this year?
For Kisan or for Apollo?
Kisan, Kisan I'm talking.
So Kisan, see I mean, in Q1, you saw 7%, 8% of EBITDA margin, right? We plan to sustain these levels for full year. And going forward, in the next 2 years, we plan to take this company at 10% to 12% EBITDA level.
Understood. Got it. Just want to get a more clarity on the CapEx side. Your PPT clearly illustrate what are your plans of capacity expansion. If you can give a exact timeline when this capacity will come and what sort of CapEx it will incur? And what would be -- what is the CapEx guidance for this and next year?
CapEx, if you see, there are 3 projects which are undergoing in Apollo Pipes. Number one is our Varanasi plant, which is taking maximum exposure in terms of CapEx spends, followed by O-PVC line. There the majority of CapEx is done. First line already started, and rest 2 lines will start by end of this year. And third, the new product category, which is window profiling. It's a pure housing building material segment, which we are planning to enter. This will also be ready by end of this financial year. And then after we are done with this, then our plan will be to expand the capacity in Southern India, right, whether we do -- buy land adjacent to existing plant or we set up a larger plant, we will evaluate that. So the CapEx spends last year was quite heavy with almost INR 200 crore-plus CapEx and plus Kisan, right? Next 2, 3 years, we will be doing around INR 100 crores to INR 150 crores on annualized basis, which will be mainly funded from the internal cash flows and plus the balance equity infusion, which is due from the promoter and employees as part of the preferential allotment.
Understood. Got it. And Varanasi is expected by Q4 FY '26? And what is the CapEx size of this plant?
Yes, the production shall start that time.
The next question is from the line of [ Hemansh from Safe Enterprise ]. [Operator Instructions]
Yes. Congratulations on quick turnaround in Kisan Mouldings. Sir, can you -- has there been a shift in sales from Apollo Pipes to Kisan Mouldings, some sales that have been diverted because of -- I mean, if you look at that the parallel performance of Apollo Pipes has been fairly weak. Also in the initial commentary you mentioned that few nontrade sales to B2B projects were there in the base year or a base quarter. Can you also quantify that, except that, how has the growth been? Also if in Kisan with high agri mix portfolio, we have a targeted margin of 10%. Then considering Apollo Pipes with a much more favorable product mix, what is the targeted margin for the stand-alone Apollo Pipes over next 2, 3 years?
So coming to question one, we don't see any cannibalization between Apollo brands and -- Apollo and Kisan brands because Apollo wasn't strong in Western India anyways. We were catering through a very small plant in Ahmedabad, right? So looking at like how Q1 panned out, we don't see any concern of cannibalization. In fact, what we want to do is we want to run both brands parallelly. So that together jointly, we could take market share from the other smaller and unorganized players. And as far as whatever the feedback we have got from our clients and the sales team, which is on ground, we think it is a better strategy to run both brands parallelly and both brands have their own set of customer base and target markets. So we continue to run both brands parallelly.
It is just the fact that now that we have such a solid presence in West India through Kisan, so Apollo will not -- there is no point of Apollo adding up new capacity in Ahmedabad or putting up any new greenfield plant. So whatever expansion has to be done in West India, it has to be done through Kisan, we are very clear on that. Other than that, Kisan also caters to some central Indian markets. There also Apollo is catering by a smaller brand in Raipur, although that will change by end of this year with the commencement of our Varanasi plant. So then we will go aggressive towards the East India. But again, Central India is somewhat which is -- which was a bit of virgin for Apollo. So Kisan comes in and fills in the shoes for that.
Okay. And the targeted margins for Apollo Pipes over next 2, 3 years?
So given that new value-added products like O-PVC pipes and window profiling and our increasing sales in cPVC and fittings, right? So Apollo should move towards a 12% to 13% EBITDA margin, but as of now, we will remain around 10% for the next 2 years because of a lot of CapEx, which is coming online. And until the capacities are utilized, you will see the negative operating leverage coming into play. But once we are done with our 286,000 ton capacity expansion and ramp-up, the margin should inch up towards 12% to 13%.
Sir, I mean the reason for volume growth, I mean despite the capacity expansions has been robust for us over last 1, 2 years and even our base is very small. So the -- any reason for volume growth lower than peers? Anything you would like to highlight, anything with respect to competition or anything? And another thing with respect to this -- the infra pipes, can you quantify the volumes in the base quarter, in June quarter, June '23?
Yes, sure. So see, I mean, that's the point which we are trying to make is that if you remove the infra segment which is catered through HDPE sales, right? Last quarter, it was around 15%, okay? And this quarter, it collapsed below 5%, okay? So if we look at our trade sales, ex of HDPE pipes, our volume increased by 10%, okay, ex of HDPE. So this does demonstrate our continued market share gains and leveraging our brand and distribution network, right? And this will be further boosted by the new capacity, which will come online plus also in Q1, the PVC prices were also pretty volatile, which again led to confusion among the channel partners about destocking, restocking. So I guess now whatever the stability comes in the PVC prices that will allow our channel partners to restock. So we are not overly concerned about Q1 flattish for Apollo Pipes because we know that was driven from a collapse in our HDPE sales.
And that also, we believe, is a onetime event because of elections in Q4, Q1 plus delayed budget. Now the budget is gone, the government projects will get all the funds allocation. So those sales will recover and come back, right? And you will see that performance in the coming quarters. But anyways, that's a separate business. Our core focus has always been to build our B2C business, right, through trade, through our channel partners, and work on the high-end products, right? For that matter, I want to highlight that our cPVC revenue was up by 20% on Y-o-Y basis in Q1. And our water tank segment also increased by more than 30% on Y-o-Y basis. So all these value-added products are growing at a good pace for us. It's just unfortunate that one segment collapsed and optically, our numbers appeared flattish, but things are going okay for us.
[Operator Instructions] The next question is from the line of [ Abhishek Anand from Finterest Capital ].
Sir, a few questions from my side. So in the PPT, you have mentioned that the CAGR would be 25% for the next 3 years. So -- and -- but say, that there are 4 capacity expansions which will be online only from FY '26. So how did we take forward for [Technical Difficulty]?
So unfortunately, your voice wasn't too clear. But as I'm able to understand is, you are asking about the revenue guidance for the next 3 years.
The CAGR which is you mentioned in the PPT, which is mentioned as 25% for the next 3 years, so the CAGR growth. So how would you take forward with that?
No, I'm very sorry. We still are not able to hear you properly. I think you are on speaker or can you turn off your speaker, and can you say it again?
Yes, is it fine now?
Slightly better.
Yes. So how would the company go for the CAGR growth of 25% for the next 3 years, and which is mentioned that capacity expansion would be done for next 3 years from now?
So yes, I mean, see I mean, we did a revenue of INR 1,000 crores in FY '24, right? And FY '25, FY '26, FY '27, we believe that we should be more than INR 2,600 crores of revenue by FY '27, right? So you can calculate CAGR here, whatever it comes out to be. And we have a full pledged business plan on which we are working to achieve these numbers.
Okay. All right. And sir, could you also mention why on the PPT is it stated that your current focus is on -- your current focus is not on oil and gas and telecom adoption as the sector is currently booming right now?
So see, I mean, as of now, we see a very large opportunity in the housing plumbing segment, right? That's where our focus is, and that's where our strong distribution network also comes into play, plus the brand pull what our group has built over the last many years in the construction materials segment. So we don't see any need to evaluate other segments in the plastic pipes given that we are going to almost triple our revenue and profits in the next 3 years. So right now, focus is on the housing construction segment.
Okay. All right. Okay. And one last question on Kisan Mouldings. Could you state that when was this acquired?
Say it again, please?
Kisan Mouldings, which was acquired by Apollo Pipes, yes, so when was this acquired on date?
Acquisition date?
Yes, yes.
Just end of March, last week of March.
End of March, okay. Okay. And the revenue, which you have generated from them?
INR 68 crores.
INR 68 crores, okay. All right.
Just for everyone's benefit, we have given the numbers for Kisan and Apollo Pipes stand-alone, including sales volume on Slide 30 of our investor presentation.
The next question is from the line of [ Deepak Mandhana from Avighna Investments ].
Two, three sets of questions. One is if I look at quarter upon quarter for Apollo Pipes, the sales has been stagnant from March 2022, and we have been almost 10 quarters now with almost no growth. And considering that we are keenly into more into the housing space, the real estate cycle in last 2 to 3 years has grown tremendously. So aren't we seeing any volume uptake from that side of the segment in terms of pipes that are used for housing plumbing?
So see, I mean, if you look at Q1 FY '24, right, it's been like 5 quarters, we have been around 21,000 tons, right, on -- which is like flattish sales volume. But what is happening is that you need to see the quality of sales, right? Like I said, in Q1 FY '25, if we move the HDPE sales, the project sales, right, our volume would be up by 10%, okay, ex of HDPE sales. So we have been expanding our products. We have been expanding our distribution network. We -- and we shouldn't be saying that we acquired Kisan plant, because Kisan plant was just a plant, right? So it is as good as putting up a new plant and ramping it up, right? So that's the exercise what we are going to do or which we are already doing -- we started doing in Kisan, right, at its Tarapur plant.
So it is just that last few quarters, right, there was good thrust from the government sector on NAL SE Jal Yojana, right? We also got orders, although we were never aggressive. If you look at the company's almost like 25%, 30% of their volume sales were coming from HDPE. But for us, it never crossed 15%, okay, because we didn't want to take orders at lower margin or with poor payment terms. Now that 15% is below 5%, right, for Q1, okay? So barring this, like I said, we are growing our trade channel sales, right, by 10%. And with our Varanasi plant, with our other products like O-PVC pipes or window profiles, right, and Kisan ramp up, I mean we are moving much faster than the industry.
But don't you see, for example, when the housing and when the government was into Jal mission, these were also the time that the revenue could have peaked for us. It could have grown much more faster. The reason is, even if it's a low margin business, it was a good opportunity to get a market share. Don't you feel that we have missed out that opportunity?
No, no. We are very happy by losing out those orders, okay. You can -- you should look at the financial health of the companies who were like doing 30%, 40% of such business through HDPE, right? We were very clear that we will not build unnecessary order book just to pad up our sales or earnings.
And can you tell me what has been such a high increase in terms of employee expense as compared to last Q1? It has grown by roughly around INR 8 crores. Is it new addition of people? Or is it any other thing that has been a one-off expense -- a one-off type expense, something like that?
Yes, yes. So you're checking consol, which includes Kisan. Ex Kisan, it's not that great an increase.
Okay. And lastly, how do you ensure what is -- had launched uPVC pipes, right?
No, O-PVC.
Yes. So what is the revenue that you foresee from that in this year? And what is the EBITDA margin on those? Because I believe that is a lucrative margin business. That is what I believe you had said in last quarter as well.
Which it is. So this year, like the first line started in Q1. The other 2 lines will start by end of this year, right? So this year, on overall revenue, my contribution from this segment should be around 5%, right? And next year, when all the 3 lines will be operational for full 12 months, the contribution should be 8% to 10%.
Okay. And what would be the EBITDA share of this?
So it's a -- see, I mean, it's a very restricted technology, right, which we got access to. We are not too comfortable sharing much details about this, please. But it is much higher than what you see on our numbers on a blended basis.
Okay. And just the last question. We had got...
[ Mr. Deepak ], may we request you to return to the question queue for follow-up questions, as there are several participants waiting for their turn. [Operator Instructions] The next question is from the line of Udit Gajiwala from Yes Securities.
First question is pertaining to the ASP calculation as per the numbers that you have reported. So Kisan's ASP seems to be higher than APL, whereas we are saying that the HDPE contribution has dropped. So what was the product mix for APL this quarter?
No, for this, you will have to repeat your question, please.
Yes. So I was trying to understand, when I look at Kisan's blended ASP, it is at around INR 120, INR 121, whereas the same for APL is INR 115 on a stand-alone basis that you all have reported. So how come is APL's ASP lower versus Kisan? What was the product mix for the quarter?
So see, mainly it is product mix, okay? Kisan, like I said, till last year, they were doing low-quality sales for projects, et cetera, right? This year, we focused on mainly fittings, right? Because that used to be the strength of Kisan brand. And that's what we started working with them to build the franchisee stronger on the strengths, right, which is their fittings product portfolio, right? So that's why you see a bit of better NSR for Kisan versus Apollo.
Understood. And for FY '25, just on the APL volumes, what kind of volume growth should we expect for '25?
So revenue, we should expect around 25% increase for Apollo Pipes on an overall basis, and Kisan will be additional.
Understood. And any quantum of inventory gains or losses for the quarter?
No, Udit.
The next question is from the line of Yash Modi from Ashika Group.
My first question was with respect to this O-PVC pipes. Was there any revenue that we booked in Q1 with respect to O-PVC? Or is that expected from Q2 onwards?
Very little.
But the first line that got operational in Q1, that revenue should start flowing from Q2 for the first line, right?
That is right.
Okay. And secondly, sir, like in last call, we said the INR 350 crores of EBITDA breakup as in INR 100 crores from O-PVC and the window profile, INR 50 crores from our 50% stake in Kisan and INR 150 crores from the core business, the original business. So if I look at the PPT, we say that our tonnage for this O-PVC pipe and window profile is shown as 11,500 tons, so -- by FY '26. So in this calculation of INR 100 crores of EBITDA from this profile, are we just taking in this 11,500 tons? Or are we adding some additional lines in that FY '27 guidance that we have given? Hello. I'm audible? Hello? Yes.
Yes, yes, yes. So this pertains to O-PVC, right, which we are not too comfortable sharing. But on a combined basis, the O-PVC plus window profiling, the EBITDA on an absolute basis would not touch INR 100 crores. I think there is some confusion in your understanding.
Okay. No, I was just referring to the last quarter con call notes, and it said like when some participant had asked this INR 350 crore of EBITDA breakup. At that time, it was INR 150 crores, INR 160 crores from core business, INR 90 crores to INR 100 crores from this segment and INR 100 crores from Kisan, of which 53% we own, so we had taken INR 50 crores. So I was just looking at that INR 350 crore of EBITDA breakup that we had projected for FY '27. Maybe I'll take it off-line if...
Yes, yes, so rest all is okay. It's just that INR 100 crores from O-PVC and window profile is slightly high. It should be around INR 70 crores, INR 60 crores.
The next question is from the line of Shikhar Mundra from Vivog Commercial Limited.
Sir, what is the FX plan for the next 3 years? How much of amount is remaining to be invested?
So the balance CapEx for Varanasi, right, and for window profile, plus some brownfield expansion is around INR 250 crores, right? And then investment into South India will be over and above this.
Okay, sir. And how much are we planning to invest in South India?
See, any big plant, it should look at investment of around INR 200 crores minimum.
All right. And so for the target of INR 2,600 crores in FY '27, is South India also part of our plan?
Which part?
Is South India also part of the plans for the INR 2,600 crore target we are setting of FY '27?
No.
Okay. So that's over and above. But the INR 250 crores in Varanasi will be a part of the plans in order to reach INR 2,600 crores. Is that right?
That is right.
The next question is from the line of Tushar Vasuja from Yogya Capital.
Sir, I have a few questions. So first one is how much have you spent on Kisan facilities for debottlenecking and efficiency up until now? And how much more will you spend?
So nothing has been spent as of now, right? Going forward, we don't see investments more than INR 20 crores to do whatever modernization that needs to be done there.
Okay. And sir, last question, what's your utilization for Apollo Pipes and Kisan?
55%.
Is that consolidated or only for Apollo?
Individual. So separate also, we are around 55% and consol also around similar number.
The next question is from the line of Nitin Gandhi from INOQUEST ADVISORS.
What will be the maximum revenue potential from the existing plant, Varanasi plant, O-PVC, window profile and South India? Separately, if you can give or consolidated if it's beating INR 2,600 crores?
See, I mean, again, we don't want to highlight much of O-PVC, right? But what I can tell you is that Apollo currently should be around INR 1,400 crores to INR 1,500 crores. Kisan should be around INR 700 crores to INR 800 crores. Then rest will be Varanasi, plus O-PVC plus window profile.
Can you share at least Varanasi mix, the revenue what it is?
Then nothing much will be left, right? We can take it offline, yes.
The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
Great. Sir, you mentioned that stand-alone volume growth you're targeting for FY '25 is 25%. Is that understanding right? Kisan will be over and above?
That's right.
So first quarter being flattish, that would imply 35% growth in the 9 months?
Right. We will get boost from our O-PVC lines, plus there could be some business recovery in the HDPE sales, right? And then overall, Varanasi will also contribute somewhat in Q4, right? So we have all the right levers to show this kind of growth.
So Varanasi is expected by when? In the presentation it means FY '26.
No, we should have 2, 3 months of business operations for Varanasi, if everything goes well, which it is.
Okay. On full capacity, 30,000 we are targeting? Varanasi 30,000 capacity you're saying will be operational for a few months in FY '25 and on so?
Yes, yes, yes, 70%, 80% of that should be available in Q4, yes.
Okay. And this window profile, 11,500, even that would be operational by end of this year fully?
No, no, no, window profile will not be there. I mean, maybe a few days of production, but nothing significant.
And just how much is the capacity number for both of them, O-PVC because this is getting commissioned in 2 parts, 1 line we've already done and second in Q4.
Sir, no, so we have given the capacity breakup in our presentation on Slide #22. But what is your question again?
No, no, 11,500 is between O-PVC and window profiling, right?
Right.
So separately -- they are 2 different products. So separately, how much is the capacity?
Sir, we are not giving breakup because of sensitivity about O-PVC.
Okay. Okay. And you -- on the CapEx front, just coming to the CapEx front, you mentioned that you would be doing INR 250 crores, which is towards the Varanasi and the window profile. So when I -- you mean window profile that would also include the O-PVC, right?
Right.
In Q4, I think you had mentioned that we will be spending for the -- you had given a number for this O-PVC. Was it something like INR 100 crores towards this project?
That is right.
O-PVC and window?
No, only O-PVC. Windows is separate.
Okay. You had mentioned something so the company would be spending INR 200 crores next 1.5 years, INR 140 crores in O-PVC and INR 60 crores towards the window profiling.
That is right because we are considering adding new lines already.
Sure, sure, no so out of this INR 250 crores, this alone takes up INR 200 crores. So I'm not just trying to get the maths that from this -- are most of the CapEx for Varanasi already done? And then just INR 50 crores is needed? Yes, what is the total CapEx for the Varanasi project?
No, no, no, so see window profile we just started. So almost 90% of CapEx is yet to be spent. Varanasi, we are done 50%, 60%, right? The rest will be done in the next 2, 3 quarters. O-PVC, 50% is done, right? Rest 50% will be paid to the suppliers as the machines come.
Okay. So possible to give, how much is the total Varanasi cost?
INR 150 crores.
INR 150 crores, okay. And INR 200 crores will be towards the windows and O-PVC. Out of which some is already done, and the rest will be executed in next 1.5 years?
O-PVC will be done in next 6 months no, when both the 2 machineries are reaching our plants.
You mentioned first line is already operational for O-PVC.
Yes, there are 2 lines, 1 line is operational, 2 lines are pending. We will make the payment to the supplier when the 2 lines reach our plants, right? No, I guess, no what is it you want to verify? Can you please be specific.
No, no, nothing to verify. Just wanted to understand how is the total project cost, this INR 250 crore is coming up. So that was the only thought process. And...
Right, so out of INR 250 crores, INR 150 crores is Varanasi, right? INR 50 crores should be balance for O-PVC and INR 50 crores for window profiles.
Okay. And next year, how much you're targeting? FY '26, what would be your CapEx number?
So next year, we are projecting INR 150 crores, right? There could be some residual CapEx for Varanasi, some for O-PVC, some for window profiles, plus we will start looking out for opportunities in Southern India, yes.
Okay. And that will again flow through majorly in FY '27?
'26 and '27, that's right.
Okay. Okay. So this around INR 150-odd crores, plus another INR 150-odd crores we can basically assume for FY '27?
That is right.
Okay. And this will have an additional revenue stream beyond the INR 2,600 crores that you are targeting?
Yes.
The next question is from the line of Utkarsh Nopany from BOB Capital.
Sir, my first question is on the revenue guidance part. So we have been missing our top line guidance for the past 3 consecutive quarters. And now we have guided a revenue growth of 25% for stand-alone operation, and INR 450 crores to INR 500 crores for Kisan for FY '25. So this implies a 37% asking revenue growth run rate for standalone and more than 100% for Kisan at lower range of revenue guidance for the remaining 9 months of FY '25. Sir, is this a realistic assumption? Wanted to know. And are we going to see such kind of a growth from second quarter itself?
So just to break it down, right, Apollo did INR 1,000 crores last year, right? This year, we expect INR 1,250 crores, INR 1,260 crores from Apollo, including whatever contribution we get from O-PVC, Varanasi, somewhat window profiles and, of course, the existing business, including a recovery in HDPE, right? And then Kisan should be INR 400 crores to INR 500 crores. We don't want to give -- this range is wide for Kisan, because we just don't want to do poor quality sales. We are focusing on quality sales, right? And as a resultant, you can see that the company turned profitable also in Q1 since we took the company in our hands, right?
So the number could be from INR 1,650 crores to INR 1,750 crores, right? Base, you can take INR 1,650 crores. Last year was INR 1,000 crores. Q1 number is INR 308 crores. You can do the maths. And whatever we are saying, we are confident that this could be achievable. Yes, there have been a few quarters where we missed the guidance. But even like last year, we used to say that we will grow by 25%, right? But we grew at 21%, 22%. So on the overall annual basis, the miss is not as bad as one would think, right? Yes, last few quarters have been slow because of whatever reasons, elections, et cetera, right? And we see good momentum picking up in the business from Q2, Q3, Q4.
Okay. And sir, like what would be our gross margin guidance for stand-alone and Kisan operations for FY '25 and '26? And what is the agri and non-agri pipe mix for stand-alone and Kisan operation for June quarter?
So for Apollo, the mix would be 55% housing and 45% agri, okay. As far as the gross -- I mean, it is better to look at the margin at EBITDA level. Apollo Pipes should be around 10%, okay? The gross margin should be higher by 100 bps, but because of the front-end cost owing to the new plants, the EBITDA margin would remain flattish. And Kisan, 70% is agri trade but this is, again, high-quality agri because of good sales mix from the fittings products, right? So Kisan, we are happy with this mix, okay? It could be like 60-40 in 2 years. But given that the business has turned profitable, it is throwing decent operating margins and we are happy with this mix.
Okay. Also like lastly, in the June quarter, Kisan gross margin turned out to be better than Apollo stand-alone operation by around 200 bps. Is this going to be maintained going forward?
Like we said, on Kisan, we are working on its strength, which is fittings, right, presence in the fittings segment. So if we continue to see momentum in that segment, Kisan could do better margin than Apollo.
The next question is from the line of Nikhil Agarwal from Kotak AMC.
Just wanted to confirm, like you said cPVC revenue growth was 28% year-on-year, right?
20%.
20%. Okay. And you -- like can you help with the volume?
No, we don't disclose the volumes.
Okay. And what about the price trajectory of late for cPVC?
The price should be on the upward side because of some antidumping -- new antidumping on resin coming into the picture. The prices should be on the upper side for cPVC.
For cPVC?
Yes.
Okay. So do you see this coming down going forward in like by the year-end because many capacities are coming in?
The cPVC you're talking about?
Yes, sir.
Yes. cPVC, we don't see any price coming down despite the capacities coming into the picture because as you see that the prices are mainly governed by the international market. And if the international market will be up, then there will be no local or domestic players, they will be selling at lower prices.
The next question is from the line of Pankaj Kumar from Kotak Securities.
Yes, sir. Sir, you said this year, standalone Apollo, we are expecting INR 1,250 crores revenue. And by FY '27, you are targeting INR 1,600 crores. So that implies roughly 13% CAGR in next 2 years. So this year, of course, we are targeting 25% growth. But next 2 years, there will be a cap moderation despite Varanasi plant coming on stream. Is this the right understanding?
How much you said for FY '26?
FY '25, you are guiding INR 1,250 crore revenue in the stand-alone business and FY '27, you said INR 1,600 crores revenue from Apollo Pipes.
No, no, no, it will be around INR 1,600 as per our current business plan.
Okay. So that excludes your O-PVC, windows and all those?
No, includes, includes. Including all the new products and plants, ex Kisan, our revenue target is INR 1,600 crores.
Yes. So INR 1,600 crore revenue over FY '25 INR 1,250 crores. So I was just working on that. So that gives you 2 years CAGR of 13% after FY '25. So is this the right understanding, you are seeing moderation in the growth from FY '25 on -- after '26?
It will come at 27%. INR 1,250 crores into 1.27 is INR 1,600 crores.
Okay, I will -- anyways. So you are comfortable on the sustaining this growth rate going ahead?
That's right.
The next question is from the line of Ujjain Shah (sic) [ Pujan Shah ] from Molecule Ventures.
Sorry, I joined the call late. So just wanted to know on the O-PVC side. So how we have been taking this product and how we have been evolving and what are the capacities will be coming in next 1 to 2 years, and the CapEx, if you can just tell me on a brief side?
Like we said that we are a bit sensitive about disclosing much information on O-PVC. It's a restrictive technology, which only a few companies in India has access to. So I request all the well wishers of Apollo Pipes to maintain the sensitivity of information on this product segment. But just to answer your question, the idea to get into O-PVC is that in the larger water infrastructure projects, this product is replacing DI, which are ductile iron pipes, right? And this product is cheaper. It is easy to install, easy to handle from the EPC contractors.
So it throws a very large opportunity in the country for the next 5 to 10 years, given the focus on water infrastructure from the existing government. And it is not similar to HDPE pipes because HDPE pipe, there is no entry barrier, right? Here, the entry barrier is the capital investment. Entry barrier is the access to technology. Entry barrier is the product approval from the government authorities. So we are -- as of now, given the current situation, we are pretty bullish on this category. And like I said, next year, it should be contributing less than 10% to our overall sales. This year, it should be around -- it should be less than 5%. So that's how the ramp-up will be.
Sir, on the contribution side, you are talking about the consolidated 10% or just Apollo Pipes' regular 10%?
Consol, on consol. Again, we urge the participants to please consider Kisan as integral part of Apollo Pipes. I want to reiterate that although it may appear that we bought -- we acquired the running company, right, but the work what we are doing in last 4 months to ensure that the quality of those sales is much, much superior than what that was being done earlier, right? It is as difficult as to start a new plant and ramp up the volumes, right? This is what we are doing in Kisan, and we are very proud of it. So I request all the analysts to consider to incorporate Kisan as our West India plant, while looking at our numbers.
Sure, sir, sure. And sir, on the O-PVC how many lines we have been planning to integrate in next 2 years? And what are the capacity -- what are the CapEx we're planning to do? And how many lines currently running in our plant?
Again, it's about our future plans to expand into this O-PVC, we are not too comfortable talking at this moment.
Okay. And so current capacity of current line consideration...
Sir -- Mr. Ujjain (sic) [ Pujan ], may I request you to return to the queue for follow-up questions. There are several participants waiting. The next question is from the line of Miraj from Arihant Capital.
Sir, just a couple of clarifications. You spoke about this, but I got a bit confused. The INR 2,600 crore top line guidance that you've given is for FY '26 or FY '27?
FY '27.
FY '27. And the Varanasi opportunity -- sorry, the Varanasi plant that you've spoken about that will start operations -- commence operations by Q4 FY '26, right, or FY '25?
Q4 FY '25.
It will start in FY '25, okay. And just one last thing that for cPVC and for the -- for cPVC the raw material that we source, is it sourced locally only because there are certain capacities in India?
Locally.
Okay. And for normal uPVC also, it is sourced locally only?
50% imports, 50% local.
The next question is from the line of Karan Bhatelia from Asian Market Securities.
Yes, team with respect to our outlook on PVC prices [Technical Difficulty]?
We can't hear you.
Karan, you're not audible. Your voice was breaking.
Yes, just wanted your outlook on the PVC prices that is for the medium term? And how do we see the channel [Technical Difficulty]?
No, Karan, I'm sorry. You need to repeat yourself, please.
Yes, am I audible now?
Yes.
Yes. I'm saying with respect to your outlook on the PVC prices for the medium term? And how is the channel inventory as of [Technical Difficulty]?
Regarding the PVC prices, right now, it has rised up in the last month and again dropped in the current month, and we see some more talks on first week of August. So that should be near to bottom. And again, there are some antidumping news in the sector for -- on PVC resin prices. So if that comes, then again that prices would be increased by 5% to 10% or around 10% to 15%, depending on what is actually the antidumping, you can say AD duty that comes on the product. So it should be on the near to bottom price, and should be on upward from next month onwards of -- for PVC prices.
Okay. And how was the channel inventory as of now?
Channel inventory because of disturbance in the prices in last month and last quarter, the channel inventory was, you can say, trying to encash that profit of certain increase in that price they decreased the channel inventory drastically. And right now, they are at, you can say, minimum level of inventories. And we hope that in the coming quarters, again, when the prices starts build up, then we will start building up their inventories.
And this is where we are factoring in a 30% plus kind of volume growth for the rest part of the year?
Yes.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you all for patient listening. I hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our team. Thank you once again for taking the time out to join us on this call.
On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.