Steel tubes Q3–24 review
Summary:
- The story of channel destocking played out across all the key players viz Apl apollo, Rama, Hitech due to volatile steel prices.
- The only exception was JTL who by the virtue of dealing in both primary and secondary was able to grow its volumes
- Expect Q4 to be strong due to stable steel prices and export led demand
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Revenue snapshot:
Below figure shows the contribution of steel tubes made out of primary(HR coil) and secondary(scrap steel).Out of 7.7Mn, APL has a TAM of 4.1Mn tons. JTL finds presence across both the market segments.
Volume performance:
Volume growth for Q3'24 was subdued due to channel destocking. JTL was the only exception since it deals both in primary and secondary.
EBITDA/ton was also subdued across the category. Hitech was the only player to show growth both on YoY and QoQ.
The value add as % remains highest for APL apollo followed by Surya. However, all of the new capacities for all the players have a higher proportion of value added products
Capacities as on Q3'24:
APL continues to have more than 50% of the entire industry capacity. All of the players have aggressively announced capacities.
Management commentary:
Surya Roshini:Expecting robust order from Saudi and the Middle East and Canada markets in future. 10% volume growth in Q4 and EBITDA in range of 600–610cr.
Hitech pipes: Expansion of dealer and distributor network by 20–25% over the next 15 months. 20–25% growth over FY25 and FY26.
APL apollo: Capex of 500 cr to increase debt levels.New product launches and market creation have been successful. Targeting export markets.
JTL industries: Expecting a 30% growth in FY24.Anticipating EBITDA margins to hit double digits in the future. Anticipating an increase in export volumes in the next quarter
All the players have started tapping export markets. Also, all the players expect Q4 to be strong on account of stable steel prices, export led demand and restocking by distributors.