Apollo Pipes Ltd

"APOLLO PIPES IS ON A JOURNEY TO CREATE LONG-TERM VALUE FOR ALL STAKEHOLDERS, AND I CAN SAY THAT THERE IS A LOT TO LOOK FORWARD TO."

Dear Shareholders

I am immensely pleased to write to you after another eventful year of progress. Our robust performance in a year marked with challenges resulted from our relentless focus on execution. While our topline grew marginally, EBITDA and Net Profit scaled by 40% and 77%, respectively.

Considering the upheaval in input prices, the appreciable ascent in profits and profitability was extremely satisfying. I congratulate the entire team and its wider ecosystem for their conscientious efforts to make this achievement possible.

Building tomorrow

Importantly, your Company has taken significant steps towards becoming growth-oriented and building strong organisational capabilities. During the year, substantial progress has been made in strengthening the core business and expanding the total addressable market.

One, we acquired the controlling stake in Kisan Mouldings, meaningfully strengthening our presence in the large and lucrative West market, where our presence has been subdued until now. With its brand strength and product quality, I am confident that the unit will catapult our topline and scale our profitability.

Two, we introduced two high-value product lines, which have generated substantial customer traction. Encouraged by the response, we will invest steadily in these revenue verticals over the next few years to increase their contribution to our performance.

Three, in addition to capacity addition at our Dadri and Tumkur facilities, we commenced setting up our Varanasi unit, which, when commissioned towards the close of FY25, will be pivotal in solidifying our presence in East India markets.

Along with our existing business, these growth engines, should result in a fix growth topline and a higher growth in EBITDA over the next three years. From a strategic perspective, I am convinced that FY24 was a critical milestone in Apollo Pipes' journey to building a brighter tomorrow for itself and its stakeholders.

Looking at the horizon

India's success story of sustaining economic growth despite global volatility has no parallel, and as a result, the global belief in India's growth story has never been higher. Almost every international economic stalwart has upped their estimate for India's GDP growth for FY25.

India's economic resurgence will have a positive impact on the real estate sector, which is projected to rise to astronomical heights in the current decade. Urban and semi-urban India is bustling with activity. And the crescendo will only increase. Case in point: Media articles have highlighted a housing demand of 93 million units in tier 2 and tier 3 cities by 2036. Demand for commercial real estate in these new real estate hubs is equally mind-boggling. This augurs well for the building products sector and promises to create a sizeable demand for our products. To add to this demand are government policies such as Har Ghar Jal, which promise to provide water to every house in the nation. This ambitious scheme has opened interesting avenues for growth for Apollo Pipes and its peers.

Agriculture is also experiencing considerable growth. With land parcels shrinking and the population increasing, considerable focus is on adopting improved techniques to enhance productivity. In 2022-23, of the 210 million hectares of gross sown area, about 115 million hectares, or nearly 55%, had irrigation access. While this is a considerable improvement over the 2013-14 benchmark, much more must be done to cover larger swathes of agricultural land under irrigation to strengthen India's food security.

Our plan

We will continue investing in building capacity and capabilities at our existing facilities to allow us to increase the volumes of our existing products. We have earmarked a capex of about B400-500 crore for the next 2-3 years to fulfil our ambition.

Alongside this, we will assess new segments and categories based on their potential and develop new solutions that align with the dynamic requirements of our progressive nation.

We will take the inorganic route where necessary to acquire capabilities we do not possess or need to develop quickly, as long as they meet our strategic and financial filters and align with our long-term objectives. Our growth blueprint objective is to achieve a 25% growth in our topline and bottomline over the next 2-3 years and to elevate our ROCE to about 25% over the same period, unleashing immense value for all our stakeholders.

Apollo Pipes is on a journey to create long-term value for all stakeholders, and I can say that there is a lot to look forward to.

I am grateful for your unwavering support and the dedication of our employees, both of which have been instrumental in the steady progress we have made thus far. I value your partnership and look forward to building a brighter tomorrow together.