APL Apollo Tubes Limited · NSE:APLAPOLLO
APL Apollo Tubes — Investor Presentation (June 2015)
46 slides from APL Apollo Tubes's investor presentation, June 2015
Slide 1: Corporate Presentation
the fastest growing manufacturer of ERW steel tubes, pipes and hollow sections in India Corporate Presentation June 2015 NSE Symbol: APLAPOLLO | BSE Code: 533758 | ISIN: INE702C01019 © 2014 – APL Apollo Tubes Ltd. All Rights Reserved | www.aplapollo.com CIN: L74899DL1986PLC023443
Slide 2: Safe Harbour
Safe Harbour Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "
Slide 3: Contents
Contents 01 Industry 02 Operations 03 Financials 04 Road Ahead Investor Presentation - APL Apollo Tubes Limited 3
Slide 4: Industry
the fastest growing manufacturer of ERW steel tubes, pipes and hollow sections in India Industry NSE Symbol: APLAPOLLO | BSE Code: 533758 | ISIN: INE702C01019 © 2014 – APL Apollo Tubes Ltd. All Rights Reserved | www.aplapollo.com
Slide 5: Industry Space
Industry Space • Steel Pipes – Steel pipes were traditionally used for transportation of water, liquids, Oil and gases – Lately steel pipes have found applications in newer areas like structural support systems Investor Presentation - APL Apollo Tubes Limited 5
Slide 6: Industry Structure – Steel Tubes & Pipes
Industry Structure – Steel Tubes & Pipes Steel Tubes & Pipes Industry Ductile Iron Seamless Welded Oil & Gas, SAW ERW Precision ERW Potable Water & Engineering, (HSAW & LSAW) (DOM) (Structural/ Commercial) Sewage Automotive and Transportation Power Oil &Gas, Water Traditional: Engineering, and sewag
Slide 7: ERW Pipes – Advantages
ERW Pipes – Advantages • ERW pipes are manufactured using HRC (Hot Rolled coils) – Thin walled pipes can be manufactured with closer tolerance to seamless pipes – HRC can be used to make any shape of pipe • Pipes offer greater economy – Usage of HRC prevents wastage of material hence the scrap produ
Slide 8: Market Size
Market Size Global steel market (1,700 mn tonnes) / $1,000 bn Welded steel (170 mn tonnes / $100 bn) Indian ERW Steel tubes market ( 7 mn tonnes / $5 bn/Rs. 30,000 crore) • India is among the leading ERW steel tubes manufacturing hubs in the world – Other bigger manufacturers include China, Turkey,
Slide 9: Application of ERW Pipes
Application of ERW Pipes Traditional, 45% APL Apollo’s Focus Area Structural, 55% Investor Presentation - APL Apollo Tubes Limited 9
Slide 10: Operations
the fastest growing manufacturer of ERW steel tubes, pipes and hollow sections in India Operations NSE Symbol: APLAPOLLO | BSE Code: 533758 | ISIN: INE702C01019 © 2014 – APL Apollo Tubes Ltd. All Rights Reserved | www.aplapollo.com
Slide 11: Pipe Making Process
Pipe Making Process HR Coil Folding Sheets Welding Testing/Cut Off Cooling Shaping Investor Presentation - APL Apollo Tubes Limited 11
Slide 12: Manufacturing Facilities
Manufacturing Facilities Hosur, Tamil Nadu Unit No. 2 Investor Presentation - APL Apollo Tubes Limited 12
Slide 13: Manufacturing Capacity
Manufacturing Capacity Unit 1 Sikandarabad Uttar Pradesh 220,000 MTPA Apollo Metalex Sikandarabad Uttar Pradesh Lloyds Linepipes 125,000 MTPA Murbad Maharashtra 260,000 MTPA SLMUL Bangaluru Unit 2 Karnataka Hosur 125,000 MTPA Tamil Nadu 320,000 MTPA Only player with manufacturing facilities across N
Slide 14: Manufacturing Value Chain
Manufacturing Value Chain Raw Power & Material Fuel 85.0% 1.5% Margin Manpower 8.0% 1.2% Miscellaneous Transportation 1.8% 2.5% Investor Presentation - APL Apollo Tubes Limited 14
Slide 15: Pricing
Pricing • Related to raw material price – Direct linkage – HR coils prices are directly linked to steel prices (Updated on 1st of every month) – The increase / decrease in prices is directly passed on to customers • 80 – 85% is raw material cost • Transportation cost have a significant impact on tot
Slide 16: Product Information
Product Information Pre-Galvanized Products MS Black Galvanized Tubes Hollow Sections Tubes 15x15 - 250 x 250 mm Size Range 21.3 – 335 mm 21 – 273 mm 19 – 127 mm 15x 10 – 300x 200 mm Products Construction, Water Over and Fencing, Cabling and Construction, & Sewage treatment, underground piping, Duct
Slide 17: Revenue Breakup & Margin Profile
Revenue Breakup & Margin Profile Revenue Break Up Product-wise (FY15) Product Margin Profile (FY15) 16% 10-13% 14% 14% Galvanized 12% Tubes, 16% 10% 78% - 9% 5-7% 8% 8% Hollow Sections, Pre-Galvanized 35% 6% 45% - 5% Tubes, 24% 4% MS Black, 25% 2% 0% MS Black Galvanized Pre-Galvanized Hollow Tubes T
Slide 18: APL – The Key Differentiators
APL – The Key Differentiators Distribution Network Range of Branding Products Advantage APL Apollo Low New Production Products Costs Fragmented Competition Industry Investor Presentation - APL Apollo Tubes Limited 18
Slide 19: Supply Chain
Supply Chain 3 – Tier Distribution Direct, 20% State wise Wholesalers Distributors , 80% District wise Distributors Retailers • APL Apollo had 300 distributors and 26 warehouses as of FY 2014 Source: Company Information as of FY 2014. Investor Presentation - APL Apollo Tubes Limited 19
Slide 20: Extensive distribution network
Extensive distribution network Distribution network Zone-wise sales break-up FY15 Central, 1% Others, 2% Exports, 6% North, 20% South , 44% West, 27% • Wider geographical reach offers advantage over competitors by reducing logistics cost and lead time • Proximity to key raw material procurement and
Slide 21: Significant Range
Significant Range 400 + varieties of tubes across Diameter Thickness wide range of diameters and thickness Recent developments: APL – ½” to 14” APL – 0.7 mm to 10 mm ― Colour-coated tubes ― Designer tubes ― Steel frames for doors 2nd Largest peer – 2nd largest peer – ½” to 20” 2mm to 12mm ― Dynamica
Slide 22: Low Production Costs
Low Production Costs • The company has cost advantages with respect to peers due to the following reasons: – Country wide manufacturing facilities -> Access to raw material and dispatch of finished goods cheaper than competition – Inline galvanizing facilities Reduces manufacturing costs for zinc
Slide 23: Fragmented Industry
Fragmented Industry There are ~1,000 • The industry is highly SMEs (Small and 60% Medium enterprises) Unorganized fragmented with few large operating in unorganized segment players holding ~40% of the pie 40% Organized • Industry has not seen significant capacity addition over past 10 – 12 years, pr
Slide 24: Competitive Landscape
Competitive Landscape Players ERW segment Surya Roshni • Company has diversified interests such as lighting, home appliances, and PVC pipes • Operates with an installed capacity of 6,00,000 T. P.A. of ERW pipes Bhushan Steel • Company’s financial status is not stable • A possible target for acquisit
Slide 25: New Products
New Products • Door Frames: The Company has designed and patented door frames for use in low-cost housing for the first time ever in India. These offer the following benefits: • Cheaper by a third compared to wooden door frames • Better strength and durability and can last close to 20 years without
Slide 26: New Products
New Products Single Door Frame Double Door Frame Hand Rail Window L Section Investor Presentation - APL Apollo Tubes Limited 26
Slide 27: Branding
Branding • Intense focus on branding to garner a larger share of the market • Targeting about 30,000 signage boards across the country for higher visibility • Focused efforts at sponsoring plumbing meets and dealer meets and participation in exhibitions in India and across the world • One-of-a-kind
Slide 28: Branding
Branding Branding on Buses Signages on Highways Fabricators Meet Fabricators Meet Investor Presentation - APL Apollo Tubes Limited 28
Slide 29: Financials
the fastest growing manufacturer of ERW steel tubes, pipes and hollow sections in India Financials NSE Symbol: APLAPOLLO | BSE Code: 533758 | ISIN: INE702C01019 © 2014 – APL Apollo Tubes Ltd. All Rights Reserved | www.aplapollo.com
Slide 30: Continuous Growth
Continuous Growth Sales/Volume 40,000 8.0 35,000 7.0 30,000 6.0 25,000 5.0 20,000 4.0 15,000 3.0 10,000 2.0 5,000 1.0 0 0.0 FY10 FY11 FY12 FY13 FY14 FY 15 Gross Revenue (INR m) 6,659 9,851 15,362 22,471 27,900 33,572 Volumes (LTPA) 1.7 2.0 2.9 4.6 5.7 7.0 LTPA – Lakh Tonnes Per Annum • Company was a
Slide 31: EBITDA
EBITDA EBITDA 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 FY10 FY11 FY12 FY13 FY14 FY 15 EBITDA (INR m) 663 1,144 1,154 1,612 1,666 1,862 • Incremental EBITDA growth in FY 15 was affected due to increase in raw material cost and adverse industry conditions ― EBITDA margin ranges between 6.
Slide 32: Working Capital Management
Working Capital Management Inventory / Debtor Days Asset Turnover Ratio 50 8.0 45 7.0 40 6.0 35 30 5.0 25 4.0 20 3.0 15 2.0 10 1.0 5 0.0 0 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 Asset Inventory Days 36 47 37 35 Turnover 6.8 6.6 6.4 5.1 Debtor Days 41 36 32 20 Ratio • Working capital cycle is effici
Slide 33: Debt / EBITDA and Optimal Leverage
Debt / EBITDA and Optimal Leverage Debt / EBITDA Leverage Ratios 4.00 3.5 3.50 3.0 3.00 2.5 2.50 2.00 2.0 1.50 1.5 1.00 1.0 0.50 0.5 0.00 FY12 FY13 FY14 FY15 0.0 FY12 FY13 FY14 FY15 D/E(x) 1.01 1.16 1.12 0.92 Debt / EBITDA Int. Coverage 2.6 2.6 2.9 2.3 3.16 3.42 2.43 2.47 (x) Ratio (x) • Optimal lev
Slide 34: Return Ratios
Return Ratios RONW 22.0% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% FY12 FY13 FY14 FY15 RONW 18.3% 20.6% 14.9% 14.2% • RONW expected to move back to 18-20% levels in the coming years Investor Presentation - APL Apollo Tubes Limited 34
Slide 35: Dividend Payout
Dividend Payout 7 25.00% 6 20.00% 5 4 15.00% 3 10.00% 2 5.00% 1 0 0.00% FY12 FY13 FY14 FY15 DPS (Rs.) 2 5 5 6 Dividend Payout 8.70% 16.30% 19.90% 22.00% • The Company has been a regular on the dividend list rewarding shareholders • Dividend payout ratio is over 20% levels and company plans to mainta
Slide 36: Income Statement
Income Statement Particulars (INR mn.) 2011-12 2012-13 2013-14 2014-15 Net Revenue 13,930 20,083 25,689 30,137 Growth % 53.9% 44.2% 27.9% 17.3% EBITDA 1,154 1,612 1,666 1,862 Growth % 7.9% 39.3% 3.1% 11.8% Margin % 8.3% 8.0% 6.5% 6.2% PAT 491 686 590 638 PAT % 3.5% 3.4% 2.3% 2.1% EPS 20.9 29.9 25.1
Slide 37: Balance Sheet
Balance Sheet Particulars (INR mn.) 2011-12 2012-13 2013-14 2014-15 Share Capital 213 223 234 234 Reserve & Surplus 2,698 3,414 4,018 4,487 Net Worth 2,911 3,637 4,252 4,721 Long Term Debt 737 859 1,396 1,416 Working Capital Debt 2,242 3,403 3,403 2,926 Total Borrowings 2,979 4,262 4,799 4,342 Gross
Slide 38: Stock Price Performance
Stock Price Performance LTM Stock Price Performance 300 225 190 150 129 115 80 75 Apr/14 Jun/14 Aug/14 Oct/14 Dec/14 Feb/15 Apr/15 APL Sensex Metal Index Mid Cap Index • APL Apollo outperformed Sensex , BSE Metal Index and Mid Cap Index over past one year − The share price has moved up from 234.5 in
Slide 39: Market Summary
Market Summary IPO Details Particulars Top 10 Public Shareholders % held (more than 1%) IPO Date November, 1995 Kitara Capital 12.8% Shares Issued Rs.2.19 mn. IDFC 6.8% Amount Raised Rs.65.7 mn. Face Value of Share Rs. 10 Emblem 4.3% Market Cap Rs. 1,037.1 cr Kotak Mahindra (Intl) 3.6% (22nd May, 20
Slide 40: Road Ahead
the fastest growing manufacturer of ERW steel tubes, pipes and hollow sections in India Road Ahead NSE Symbol: APLAPOLLO | BSE Code: 533758 | ISIN: INE702C01019 © 2014 – APL Apollo Tubes Ltd. All Rights Reserved | www.aplapollo.com
Slide 41: Vision FY 17: 1MTPA
Vision FY 17: 1MTPA Achieve 1MTPA production by FY 2017 and volume growth of over 25% p.a. • Well-planned Roadmap for capacity addition • Proven ability to tap across plants industry demand and 1mn MTPA grow sales volumes • Profitable operations to production $1bn above 30% sustainably fund capex th
Slide 42: Investments Required
Investments Required • Planning greenfield projects of approximately 1 – 1.2 LTPA each in Eastern India and Middle East (Dubai) • Capital cost of Rs. 100 crore for the two plants to be funded through internal accruals Investor Presentation - APL Apollo Tubes Limited 42
Slide 43: Financial Estimates
Financial Estimates 70,000 1400 60,000 1200 50,000 1000 40,000 800 30,000 600 20,000 400 10,000 200 0 0 FY 15 A FY 16 E FY 17 E FY18E Revenue ( in INR m) 33,572 42,000 49,980 59,976 Volume ( '000 TPA) 701 840 1000 1200 • Revenue and Volume are expected to grow at a CAGR of roughly 22% for the period
Slide 44: Investment Rationale
Investment Rationale • Largest player in the ERW segment in India • Nation wide operations with 5 plants across the length and breadth of the country • Strong distribution network with over 400+ distributors and 26 dealers • Wide variety of products (400+) catering both to structural applications an
Slide 45: Contact
Contact For any Investor Relations queries, please contact: Deepak Goyal, CFO Gaurav Sud Diwakar Pingle APL Apollo Tubes Limited Kanav Capital Christensen Investor Relations Email: deepak.goyal@aplapollo.com Email: gaurav@kanavcapital.com Email: dpingle@christensenir.com Phone: +91 0120‐4041400 Phon
Slide 46: Thank You
Thank You Investor Presentation - APL Apollo Tubes Limited 46