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APL Apollo Tubes- Research & Insights

APL Apollo is India’s largest structural steel tubes company with a market share of over 50% in the primary market. The company has a manufacturing capacity of 2.6 million tons across 10 manufacturing plants and a product portfolio of over 1500+ SKUs.


Surge’s Key Focus Areas

APL Apollo checks three of our six key focus areas- Leadership & Edge, Innovation & Pivots and Stellar Management Execution.

And each of these strengths has been attained on the back of each other- Stellar Management Execution, Vision & Strategy has led to strong focus on Innovation, which eventually transformed into an Edge and this Edge has resulted in APL gaining market leadership.


Leadership & Edge

APL Apollo has market leadership across all metrics that one would like to see-

One of the primary edge that APL has been able to gain is its ability to secure raw material (HRC Steel Coils) at a competitive price. Given its scale APL consumes ~10% of India’s HRC production and 2% of India’s steel production and is among the top customers of major steel producers in India.

This ability to procure raw material at lower prices than the competition is a big edge given that in the steel tubes industry, raw material cost is ~85% of revenues and EBITDA margins are only in high single digits. So even a couple of % of lower raw material cost would boost end profitability in a big way.


One of the ways APL has used this lower raw material cost edge is by discounting its commodity products (high volume low value) and thus gain a larger market share in terms of volume, which again feeds into a larger scale of operations and raw material procurement.

Innovation & Pivots

One of the important drivers of APL leadership is the continuous innovation that it has undertaken in terms of product innovation into high value & low competition products and also efficient manufacturing. According to the management, APL does not have competition in 40% of its products.

APL was the 1st company in India to introduce Direct Forming Technology (DFT) in tubes manufacturing in FY18. Under this technology, hollow sections of various shapes, sizes, and thickness are formed directly through high-speed welding. The technology enables customized orders including size customization. It also reduces rollover time to ~30minutes from 6-8hours earlier under the conventional technology.


In our RACL Geartech report, we had discussed the framework of providing value addition by a manufacturing company to its customers. With DFT, APL has been able to do so to an extent by firstly providing custom sizes in smaller quantities and secondly by delivering products to its distributors quickly. This ability to supply different sizes in required quantity in a lower timeframe is one of the primary USP of APL for its distributors.


APL has over last many years increasingly focused on value added products wherein the competition is less and the margins are higher. Some of these products are the ones wherein APL has been the innovator and the 1st company to launch these products, these are products like-


A. Large diameter 300x300mm tubes that APL introduced with its DFT technology. APL is now introducing 500x500mm tubes for the 1st time in India.


B. Patented products primarily in the home improvement segment under Apollo Tricoat.


C. APL is now introducing color coated tubes for the 1st time in India.


Stellar Management Execution

APL Apollo is led by its promoter MD- Mr. Sanjay Gupta. Mr. Sanjay Gupta is a 2nd generation promoter; he took over the management of APL in 2002 after the death of his father. At that time, APL had a capacity of just 32,000 Tons; from there Mr. Sanjay Gupta has scaled APL to 2.6 million tons capacity currently.



There are three qualities that we evaluate in Stellar Managements- Execution, Strategy and Vision.


Execution capabilities and Strategy of Mr. Sanjay Gupta is very clear from the scale-up of business over so many years and the strategy of focusing on high value products on the back of newer technologies.


One of the recent examples of Mr. Gupta’s execution & strategy was visible during the midst of Covid. During the covid lockdown in May’22, APL Apollo made a strategic call that they will no longer sell its products on credit and will only sell on cash basis.


“What happened earlier we know that we have to do this thing but when the train is going at the speed of 200 km everybody was scared. We were scared how to stop it and repair it or not, if the train runs in speed then the nut bolts loosen ups. But if 10 out of 100 nut bolts are loose and 90 are running fine then the person leaves it as it is. When the train stopped in the month of April we decided that whatever work we have to do after 1 or 2 years now the time has come and we should take advantage of the COVID time as whatever growth has hampered it is all done, now we are not going to sell the material on the credit basis. We are going to sell the material on the cash basis because the system was without fear and strength was there, it came out. The management thinks that there are lot of chances for improvement in the future.” – Sanjay Gupta Q4FY20 Concall


As a result of this move, APL’s debtor days have reduced from ~30 days pre-covid to less than 5 days now and the overall working capital cycle is low just few days.


With his execution & strategy, Mr. Sanjay Gupta has created a business with high ROCE, high cashflows, low working capital and low debt within a highly competitive, unorganized and commoditized business of Steel pipes.


Understanding the vision of a management is a qualitative exercise and it is something that has to be picked up from some very subtle clues that management might leave for us. In order to understand Mr. Sanjay Gupta’s vision for APL, I’ll highly recommend members to listed to him speak in some of APL’s concalls. The confidence and passion he has is just amazing.


Two important clues from recent concalls on his vision for APL-

Q2FY22 Concall Snippet



“There are talks that India’s total steel consumption is going to increase to 200 million tons. Now based on how the use of Steel tubes is increasing, if steel tubes become even 8% of this market, India will need 16 million tons of tubes. The total capacity in India is currently ~9 million tons. If this 16 million tons demand gets created, then in India there is no other brand other than APL Apollo who can fulfill this. And I am working towards this vision only. All this value addition is just time pass that we are doing, the day markets say “material doo”, then APL is on the forefront and that time will come. All we want is to keep ourselves intact till that time comes by avoiding any major mistakes.” – Q4 FY22 concall



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