APL Apollo Tubes Ltd began the new financial year on a sombre note. The structural steel tubes company recently released its June quarter (Q1FY27) business update, with volumes falling 6% year-on-year and 19% sequentially to 744,823 tonnes—well below the 875,000-tonne guidance given during the Q4FY26 earnings call. For perspective, Q4FY26 and FY26 volumes had grown 9% year-on-year and 10.6%, respectively.
Demand slowdown
What hurt Q1FY27 volume growth? Dull domestic demand and lower utilisation at its Dubai operations due to the impact of the West Asia war.
Volumes under the flagship APL Apollo brand declined 11% year-on-year and accounted for 76% of total volumes. Roofing products remained steady, while the SG Premium brand posted a sharp 315% year-on-year increase, albeit on a low base. UAE volumes plunged 46% as utilization levels took a hit. During the Q4FY26 earnings call, the management had said its Dubai operations were running at about 40% utilization.
To be sure, the slowdown had been building for months. During the Q4FY26 earnings call, the management said rising hot-rolled coil (HRC) prices had prompted dealers to delay purchases in anticipation of lower prices, leading to channel de-stocking. Geopolitical disruptions hurt the Dubai business, while elevated steel prices, labour shortages and temporary fuel-related issues affected domestic operations.
Guidance risk
Nevertheless, Q1FY27 volume performance adds to risks.
As a 1 July report by JM Financial Institutional Securities noted, "While APL has guided for 15–20% year-on-year volume growth for FY27E, we believe that the weak Q1FY27 performance increases the likelihood of a downward revision to its full-year volume guidance."
What's more, "The ongoing HRC price correction is likely to keep volumes subdued in Q2FY27 too," highlighted Nuvama Institutional Equities. "Given a volume miss, likely weak Q2FY27 with falling HRC prices and destocking, we are cutting FY27/28/29E EPS by 3%/6%/6% and target multiple to 33x (from 35x)," it added in a report dated 1 July.
Margin watch
Investor attention is now shifting to profitability, where expectations remain relatively resilient.
In the Q4FY26 earnings call, Anubhav Gupta, APL’s chief strategy officer, said, “Our focus right now is to protect our profitability and margins when we know that volume prediction becomes challenging in this environment.”
When APL reports its Q1FY27 earnings, Ebitda per tonne will be closely watched to assess whether the company has managed to protect profitability despite weaker demand and channel de-stocking. JM Financial expects Ebitda per tonne to remain broadly stable at around ₹5,500. For comparison, Ebitda per tonne stood at ₹5,522 in Q4FY26 and ₹5,160 for FY26.
Growth plans
Meanwhile, the management plans to increase structural steel capacity to 8 million tonnes by FY28 while expanding its value-added product portfolio and distribution network. The expansion includes new greenfield facilities in Gorakhpur, Siliguri and Malur, along with de-bottlenecking and modernization of existing mills.
APL is targeting Ebitda growth of 20-25% in FY27, supported by a higher contribution from value-added products.
For now, investors can expect demand to recover once steel prices stabilize. The spotlight will be on profitability in the near term. APL’s shares are down about 7% so far in 2026.