APLAPOLLO Q2 FY27 Earnings Call: Guides Rs. 2,200 Cr FY27 EBITDA, Best-Ever Quarter Despite Dubai Disruption

APLAPOLLO held its Q2 FY27 earnings call on October 26, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Best-Ever Quarter Despite Dubai Disruption and Steel Shortage

• Record quarter — Q2 FY 2026-2027 was the company's best-ever quarter on sales volume, EBITDA, and net profit, with volumes of 960,000 tonnes despite UAE disruption, sharp raw material price swings, domestic steel shortage, and container trade disruption hitting exports.
• EBITDA/tonne of Rs.6,000 — management asserted this is structurally different from the Q2 FY23 peak, which was flattered by one-off gains in coated pre-galvanized tubes amid a China COVID-era export shutdown; the CSO called the current Rs.6,000/tonne "much more sustainable".
• Zero working capital days — cash on books rose 15% to Rs.16 billion as at September 2026 (end of Q2 FY 2026-2027) versus Rs.14 billion in Q1 FY 2026-2027.
• Other income of ~Rs.80 crore — included a Rs.10 crore one-off gain on a subsidiary stake sale; excluding it, other income was ~Rs.30 crore vs ~Rs.40 crore in Q1 FY27, a decline attributed to forex gains/losses between quarters. Interest cost rose QoQ but was not specifically addressed by management.
• Slide 18 typo — CMD Sanjay Gupta confirmed the H1 FY 2026-2027 EBITDA/ton of ~Rs.11,000 shown on slide 18 is a typo and will be corrected; no corrected figure was disclosed.

Rs.2,200 Cr FY27 EBITDA "By Any Means"; Rs.3,000 Cr FY28 Path Conditional

• FY 2026-2027 EBITDA of Rs.2,200 crore — management committed to crossing Rs.2,200 crore "by any means" with 20% absolute EBITDA growth by March 2027; CMD Sanjay Gupta pushed back on UBS's Rs.2,300 crore framing, staying conservative at Rs.2,200 crore.
• FY 2027-2028 EBITDA above Rs.2,500 crore — management guided FY28 EBITDA to cross Rs.2,500 crore, with a Rs.3,000 crore path supported by ~5 million tonnes at Rs.6,000/tonne, subject to three normalizations: Dubai's return, steel availability in the country, and container rates coming down.
• Dubai drag quantified — management said that had Dubai been normal, FY 2026-2027 EBITDA would have definitively reached Rs.2,400 crore; the UBS analyst contended Rs.2,500 crore was easily achievable in that scenario.
• Volume guidance selective — management reaffirmed 15% volume growth for FY 2026-2027 in APL Apollo branded and roofing products but declined to commit consolidated volume growth; H1 FY27 volume growth came in at ~4%. On the analyst's math requiring 20%+ H2 growth, CMD said 20%+ is "100% possible" for the Apollo brand.
• EBITDA/tonne guidance — management signaled a FY 2027-2028 full-year EBITDA/tonne target of Rs.6,000-6,500, to be formalized after observing one more quarter; profit per tonne guided above Rs.6,000 for FY 2026-2027.
• Q3 FY 2026-2027 EBITDA/t above Rs.6,000 — management guided Q3 (December quarter) as "much better" than Q2, with repetition at/above Rs.6,000/tonne possible; volumes could reach 4 lakh tonnes/month from December 2026, though November 2026 will also remain weak.

Rs.500 Cr EBITDA Business Ready, But Timing Outside Company Control

• Dubai at ~40% utilization — CMD Sanjay Gupta said no material is moving in or out and the situation is "not in our hands"; currently no loss, with the company only covering its costs. India exports have been hurt by very high container freight prices.
• Rs.500 crore EBITDA opportunity on standby — management stated a Rs.500 crore EBITDA business stands fully ready in Dubai, with 500,000 tons of capacity ready and Rs.10,000/ton EBITDA expected whenever it restarts (timing unspecified). Impediments: long shipping lead times, damage on externally procured material, and halted exports.
• Capacity ramp by March 2027 — Dubai capacity to rise from ~300,000 tons to 0.5 million tons by March 2027 (end of FY 2026-2027) via brownfield expansion adding two new mills; the expansion was not slowed during the disruption. Current run rate is 100,000 tons per annum (Q2 FY 2026-2027); if the situation improves, the run rate could immediately reach 200,000-400,000 tons in subsequent quarters (period unspecified).
• High-margin mix post-expansion — management expects Rs.8,000-10,000/ton EBITDA on the expanded 0.5 million ton base post-March 2027 (FY 2027-2028 onward).
• Visibility limits — management cannot commit on UAE operations or the LG premium brand (no visibility currently), but is "very confirmed" on the APL Apollo brand and roofing products.

Apollo Brand and Roofing Carry the Growth Load

• 20% YoY branded growth in H1 — APL Apollo branded and roofing product sales volumes grew 20% YoY in H1 FY 2026-2027; management expects double-digit volume growth in H2 FY 2026-2027 and targets at least 15-20% YoY growth for these brands in FY 2026-2027.
• Roofing ramp-up — capacity stands at 60,000 tons/month (~7 lakh tons annualized); Q2 FY 2026-2027 volumes were 45,000 tons (H1: 135,000 tons), with quarterly scope up to 175,000 tons — the target for Q3 FY 2026-2027. New lines were commissioned in July (Q2 FY 2026-2027). End-use mix: 50% housing, 25% commercial & industrial, 25% other industrial applications.
• Demand intact — APL Apollo branded tube demand is strong with no decline visible anywhere; order books look healthy and inquiries are strong, though customers are not finalizing orders due to higher steel prices (as of the call, Q3 FY 2026-2027). October 2026 is running above internal guidance.
• Monsoon impact limited — on ~13% rainfall deficit in FY 2026-2027 and ~50% housing exposure, Sanjay Gupta does not expect a negative demand impact from tier 2/3 cities and farmers; any impact would be limited to 2-4% up or down in demand (FY 2026-2027).
• Pricing premium — APL Apollo black pipe retails at ~Rs.70,000/tonne vs peer brands below Rs.68,000; with star coil input at ~Rs.60,500 and conversion, freight, and office costs, even the company's "worst item" currently earns ~Rs.6,000/tonne margin.
• Light structures drag GP/tonne — Q2 FY 2026-2027 GP/tonne fell ~Rs.500 QoQ despite improving volume mix, attributed to light structures (25% of Q2 product mix) carrying lower realization and GP/tonne than the rest of the portfolio.

Expansion Without Margin Dilution; New Aerospace Line in Approval

• 8 million tonnes capacity path — the company targets 7 million tonnes of greenfield plus brownfield capacity plus 1 million tonne of debottlenecking in the next 2 years (i.e., by ~FY 2028-2029); management declined to guide on utilization, reiterating an EBITDA-over-volume focus.
• Expansion should not dilute spreads — on 2 million tons of capacity addition over the next 1-1.5 years (into FY 2027-2028), management said new greenfield plants add minimal fixed cost and remaining expansion is brownfield, so capacity expansion should no longer dilute EBITDA spreads the way it did 2-3 years ago.
• Defense/aerospace seeding — a new line developing items for ISRO/DRDO is slated for development handover in November (Q3 FY 2026-2027) with approvals expected in 1-4 months; management expects a significant margin uplift post-approval (period unspecified). Backed by a newly commissioned specialized tube mill (sizes from 250x250 mm dia with 16 mm thickness), with samples under evaluation and results expected by ~Q4 FY 2026-2027.
• Power cost target — power cost is at Rs.6.2-6.3/unit (Q2 FY 2026-2027); management is targeting Rs.5/unit in FY 2027-2028, versus the goal set ~2 years ago of a Rs.2/unit reduction. Q2 cost actions included freight reduced by Rs.150/ton and lower electricity cost; employment cost has not been reduced and should improve once volumes ramp up (period unspecified).
• Secondary segment exit — management aims to take the segment matching thin/secondary material to 10-15%, then 20% over 1-2 years (by FY 2028-2029), and targets exiting the secondary-material-linked segment within the next 1-2 years (FY 2027-2028 to FY 2028-2029).
• Disclosure tightened — the company has deliberately stopped sharing product-by-product EBITDA bridges on open platforms because competitors were using segment-level data to target specific products; details available only one-on-one with CSO Anubhav Gupta. Management also declined to quantify heavy/super-heavy segment volume share for Q2 FY 2026-2027.

FY27 Free Cash Flow Expected to Surpass FY26's Rs.1,300 Cr

• H1 FY 2026-2027 free cash flow of ~Rs.200 crore — operating cash flow of ~Rs.700 crore less Rs.400 crore of capex (per slide 19); dividend payments made in August-September are fully accounted for in this figure.
• H2 FY 2026-2027 EBITDA of ~Rs.1,200 crore — per Anubhav Gupta citing Sanjay Gupta; after taxes, zero dividend and hardly Rs.200 crore of H2 capex, FY 2026-2027 free cash flow is expected to surpass the Rs.1,300 crore generated in the whole of FY26 (FY 2025-2026).
• Capex phasing front-loaded — H1 FY 2026-2027 capex outflow (including capital advances) was Rs.400 crore versus Rs.600 crore for the whole of FY26 (FY 2025-2026); H2 FY 2026-2027 cash outflow will be "pretty low", supporting free cash flow.
• Net cash of ~Rs.1,600 crores — management stated this against an analyst-cited ~Rs.2,500 crores including other financial assets; if Rs.1,200 crores EBITDA is achieved in H2 FY 2026-2027, cash is projected to rise by Rs.600-700 crores to ~Rs.2,300 crores, of which Rs.200-300 crores is earmarked for capex.
• FY27 cash-positive target of ~Rs.2,000 crores — management is targeting closing FY 2026-2027 at this level, with deployment of surplus cash to be decided subsequently with the board and large shareholders. EBITDA-to-operating-cash-flow conversion is expected to be better in FY27 than in FY26 once annual books are closed.
• Reclassification clarified — non-current financial assets fell to Rs.57 crore from Rs.282 crore as of March 2026 (FY 2025-2026 year-end) because fixed deposits with original maturity over one year were reclassified as within one year (CFO Chetan Khandelwal).