Apollo Pipes Ltd (NSE: APOLLOPIPE) The Indian piping solution provider recorded a consolidated net loss as seasonal construction bans and volatile raw material prices impacted top-line performance. Despite current headwinds, the firm remains committed to a significant capacity expansion roadmap and technological partnerships to drive long-term volume growth.
Company reported a consolidated net loss of ₹3.3 crore for the third quarter ended December 31, 2025, a sharp decline from the ₹6.2 crore profit recorded in the prior-year period. Consolidated revenue fell 20% year-over-year to ₹247 crore, driven by a 6% decrease in sales volumes and volatile pricing for PVC resin. While revenue showed a modest 5% sequential improvement over the second quarter, intensified margin pressure and increased operational costs led to a significant contraction in profitability.
Operational Updates
The company is currently integrating its 58.6% stake in Kisan Molding Limited, acquired in March 2024, which added approximately 58,000 tons of capacity to its portfolio. In a separate strategic move, Apollo Pipes partnered with Lubrizol to utilize proprietary TempRite technology for its CPVC piping systems, aimed at increasing win rates for high-margin infrastructure projects. Furthermore, the board confirmed that the new greenfield manufacturing plant in Mirzapur (near Varanasi) is expected to commence commercial production by the end of the 2025-26 financial year.
Financial Performance
For the quarter ended December 31, 2025, EBITDA decreased 48% year-over-year to ₹12.0 crore, with EBITDA margins compressing by 270 basis points to 4.9%. On a nine-month basis (9MFY26), revenue declined 13% to ₹757.9 crore, while net profit dropped 72% to ₹6.5 crore. The company’s balance sheet shifted from a net cash position of ₹46 crore in FY25 to a net debt of ₹28 crore in Q3FY26. Efficiency metrics also showed signs of stress, as Net Working Capital (NWC) days stretched to 58 days, compared to 36 days at the end of the previous fiscal year.
Capacity Roadmap
Management aims to increase annual production capacity to 286,000 tons within the next two years, up from the current 226,500 tons. The strategy focuses on diversifying the product basket from 3,000 to over 4,000 SKUs, with a particular emphasis on value-added products like uPVC window and door profiles. The company intends to fund this expansion through internal cash flows rather than additional leveraging. For the next three years, Apollo Pipes is targeting a revenue growth CAGR of over 25%, supported by increased penetration in Central, Western, and Eastern India.
Market Dynamics
The construction material industry faced significant challenges during the quarter, including a construction ban in the Delhi-NCR region due to pollution levels and a general slowdown in government infrastructure spending. Historically, the Indian PVC pipe market is expected to register a 15% CAGR through FY27, driven by government initiatives such as “Housing for All” and the National Rural Drinking Water Mission. Management noted that while downward trends in PVC resin prices previously hindered demand, signs of a price recovery in late Q3 suggest more favorable conditions for the upcoming quarter.
Investment Thesis: (Bull vs. Bear)
• Bull Case: Apollo Pipes maintains a top-6 market position in an industry shifting toward organized players. The partnership with Lubrizol and the expansion into the Varanasi and Raipur markets provide clear catalysts for volume growth. If management successfully executes the 286,000-ton capacity ramp-up without further leveraging the balance sheet, the firm is positioned to capture a larger share of the anticipated 15% industry growth.
• Bear Case: The company is currently experiencing significant margin erosion and a stretch in its working capital cycle. The transition from a net cash to a net debt position, coupled with an annualized ROE/ROCE of just 1.0% for the current period (down from 4.2%/6.6% in FY25), suggests that recent acquisitions and expansions are not yet yielding efficient returns. Continued volatility in raw material prices and macro-regulatory hurdles like pollution-related bans remain persistent risks.