Apl Apollo Tubes CAPEX jumped on 43.9% in 2015 and Revenue surged on 25.7%

09-05-2015 • About Apl Apollo Tubes ($APLAPOLLO) • By InTwits

Apl Apollo Tubes reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Apl Apollo Tubes has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.9%. At the same time it's in pair with industry average of 10.2%.
CAPEX is quite volatile: 1,839 in FY2015, 1,278 in FY2014, 849 in FY2013, 779 in FY2012, 791 in FY2011
The company has highly profitable business model: ROIC is at 16.6%
It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 1.6x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Apl Apollo Tubes ($APLAPOLLO) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	9,010	13,923	20,083	24,970	31,383	25.7%
SG&A		936	1,321
EBITDA	957	1,151	1,595	1,646	1,847	12.2%
Net Income	431	491	686	590	638	8.1%
Balance Sheet
Cash	43	20	23	19	18	-8.3%
Short Term Debt	2,111	2,387	3,606	3,676	2,926	-20.4%
Long Term Debt	361	719	842	1,372	1,417	3.3%
Cash flow
Capex	791	779	849	1,278	1,839	43.9%
Ratios
Revenue growth	-76.4%	54.5%	44.2%	24.3%	25.7%
EBITDA growth	59.3%	20.3%	38.6%	3.1%	12.2%
EBITDA Margin	10.6%	8.3%	7.9%	6.6%	5.9%	-0.7%
Net Income Margin	4.8%	3.5%	3.4%	2.4%	2.0%	-0.3%
SG&A, % of revenue		6.7%	6.6%			0.0%
CAPEX, % of revenue	8.8%	5.6%	4.2%	5.1%	5.9%	0.7%
ROIC	20.5%	18.2%	19.5%	16.0%	16.6%	0.5%
ROE	20.2%	18.3%	20.6%	14.9%	14.2%	-0.7%
Net Debt/EBITDA	2.5x	2.7x	2.8x	3.1x	2.3x	-0.7x

Revenue and profitability

Apl Apollo Tubes's Revenue surged on 25.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.3 pp from 14.2% to 23.5% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 5.9%. CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average level of CAPEX/Revenue for the last three years was 5.1%.To maintain this fast growth Apl Apollo Tubes invested a large share of EBITDA (99.6%) to CAPEX.

Return on investment

The company operates at good ROIC (16.55%) and ROE (14.21%). ROIC increased slightly on 0.52 pp from 16.0% to 16.6% in FY2015. ROE decreased slightly on 0.67 pp from 14.9% to 14.2% in FY2015.

Leverage (Debt)

Debt level is 2.3x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 3.1x to 2.3x in FY2015. Debt dropped on 14.0% in FY2015 while cash decreased on 8.3% in FY2015.

Management team

Romi Sehgal is a the company's CEO. Romi Sehgal has spent 3 years at the company. Apl Apollo Tubes's CFO Deepak Goyal has spent 3 years at the company.

Appendix 1: Peers in Iron & Steel Products

Below we provide Apl Apollo Tubes benchmarking against other companies in Iron & Steel Products industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Msp Steel & Power ($MSPL)	-61.2%	19.7%	60.6%	29.4%
Metal Coatings (India) ($METALCO)	-21.7%	20.4%	-15.8%	13.0%
Usha Martin ($USHAMART)	-47.1%	10.4%	7.8%	12.5%
Lakshmi Precision Screws ($LAKPRE)	-29.7%	9.9%	-6.2%	7.5%
Nile ($NILE)	-33.5%	7.5%	-19.1%	6.9%
Median (10 companies)	-31.6%	15.2%	-8.6%	4.8%
Apl Apollo Tubes ($APLAPOLLO)		54.5%	44.2%	24.3%	25.7%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Usha Martin ($USHAMART)	18.7%	13.2%	18.1%	18.7%
Msp Steel & Power ($MSPL)	15.8%	-1.1%	17.7%	13.8%
Lakshmi Precision Screws ($LAKPRE)	14.5%	15.9%	16.2%	7.0%
Nile ($NILE)	6.4%	5.5%	5.6%	6.0%
Metal Coatings (India) ($METALCO)	4.2%	4.7%	4.5%	4.1%
Median (6 companies)	6.7%	5.2%	5.6%	6.5%
Apl Apollo Tubes ($APLAPOLLO)	10.6%	8.3%	7.9%	6.6%	5.9%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Usha Martin ($USHAMART)	26.0%	21.6%	23.5%	29.0%
Msp Steel & Power ($MSPL)	71.2%	38.3%	14.8%	15.4%
Median (2 companies)	9.3%	6.0%	1.6%	22.2%
Apl Apollo Tubes ($APLAPOLLO)	8.8%	5.6%	4.2%	5.1%	5.9%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Gandhi Special Tubes ($GANDHITUBE)	31.2%	28.3%	18.9%	13.2%
Usha Martin ($USHAMART)	9.5%	4.3%	6.5%	7.6%
Msp Steel & Power ($MSPL)	6.4%	-2.8%	7.2%	5.9%
Lakshmi Precision Screws ($LAKPRE)	13.7%	14.4%	11.9%	3.1%
Electrotherm (India) ($ELECTHERM)	7.1%	0.0%	-5.3%	0.0%
Median (23 companies)	9.4%	8.5%	7.2%	5.9%
Apl Apollo Tubes ($APLAPOLLO)	20.5%	18.2%	19.5%	16.0%	16.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Lakshmi Precision Screws ($LAKPRE)	2.4x	2.7x	3.4x	8.1x
Msp Steel & Power ($MSPL)	9.2x		6.4x	6.6x
Usha Martin ($USHAMART)	2.6x	10.0x	4.8x	4.8x
National Fittings ($NATFIT)	0.6x	0.8x	0.1x	0.0x
Gujarat Containers ($GUJCONT)	0.0x	2.6x	2.6x	0.0x
Median (13 companies)	2.6x	2.6x	3.9x	0.0x
Apl Apollo Tubes ($APLAPOLLO)	2.5x	2.7x	2.8x	3.1x	2.3x

Apl Apollo Tubes stock price chart

Apl Apollo Tubes financials

mln.	FY2010	FY2011	FY2012

Revenue	38,124	9,010	13,923
EBITDA	600.6	956.6	1,151
Net income	297.8	430.9	490.6
CAPEX	559.1	790.5	779.0
Debt	1,573	2,473	3,106
Cash	30.773	43.280	20.220

About Apl Apollo Tubes

APL Apollo Tubes Limited manufactures and sells steel tubes and pipes in India. It offers MS black round tubes for liquid transmission, idlers, mechanical and engineering, structural, water and sewage, water well, fire protection, fencing, and other applications; galvanized iron tubes that are used in underground piping, overground piping, power, refineries, scaffolding, engineering structurals, scientific experiments, and fire-fighting systems; and pre-galvanized tubes for applications in fencing, cabling, ducting, automotive, and greenhouse structures. The company also provides hollow sections that are used in construction, machinery, automotive, furniture, storage system, and transmission tower applications; and API tubes, such as plain-end, threaded-end, and belled-end pipes, as well as through-the-flow line pipes for use in conveying gas, water, and oil and natural gas industries. In addition, it offers dynamically balanced tubes for use in engineering sector; idler tubes for conveyors; and propeller shafts and bobbin tubes for use in textile industry. The company also exports its products to approximately 35 countries. The company was formerly known as Bihar Tubes Limited and changed its name to APL Apollo Tubes Limited in 2010. APL Apollo Tubes Limited was founded in 1986 and is based in Ghaziabad, India.