| Apollo Pipes Limited | ||||||
| Ratings reaffirmed at 'CRISIL A/Stable/CRISIL A1'; Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A/Stable/CRISIL A1’ ratings on the bank facilities of Apollo Pipes Limited (APL).
In fiscal 2022, the company witnessed revenue growth of 50% driven by increase in realisations by 38% and volumetric growth of ~10%. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin fell to 11.9% in fiscal 2022 from 14.8% in fiscal 2021 on account of normalising polyvinyl chloride (PVC) prices and rise in input cost. Revenue is expected to grow 15-20% over the medium term driven by higher volumes, supported by improved geographical reach, while realisations are likely to moderate. The operating margin is expected to remain healthy at 11-12% over the medium term owing to volatility in input prices.
The financial risk profile was strong backed by healthy gearing and robust debt protection metrics, indicated by interest coverage ratio above 20 times in fiscal 2022. Liquidity will remain comfortable aided by higher cash accrual and moderate capital expenditure (capex).
The ratings continue to reflect the company’s established market position in north India, increasing geographical diversity and strong financial risk profile because of healthy capital structure. These strengths are partially offset by exposure to intense competition and susceptibility to fluctuations in raw material prices and foreign exchange (forex) rates. |
Key Rating Drivers & Detailed Description Strengths: Established market position The promoters have experience of around two decades in the PVC pipes industry. Their expertise has helped the company withstand business cycles and establish the APL Apollo brand, which is common to the APL Apollo group and is used by the flagship company, APL Apollo Tubes Ltd (‘CRISIL AA/Stable/CRISIL A1+’). APL has 450 retailers and over 150 distributors. Product portfolio is diverse and includes column pipes, unplasticised PVC and chlorinated PVC plumbing pipes and fittings, domestic and sewage pipes and water tanks.
Strong financial risk profile Adjusted gearing was around 0.1 time as on March 31, 2022. Debt protection metrics will remain comfortable, with interest coverage and net cash accrual to total debt ratios expected above 15 times and 1.25 times, respectively, in fiscal 2023.
Weaknesses: Susceptibility of profitability to fluctuations in raw material prices and forex rates The company is vulnerable to volatility in forex rates as it imports part of its raw material requirement while exports are minimal. Also, the price of resin is volatile and susceptible to change in global prices and regional demand-supply dynamics. The company will remain exposed to cyclicality in the PVC industry.
Exposure to intense competition The company remains under intense competitive pressure because of low product differentiation and high price sensitivity. |
Liquidity: Strong Cash and equivalent was healthy at Rs 40 crore as on March 31, 2022. Expected cash accrual of more than Rs 70 crore per annum will be sufficient to cover debt obligation of Rs 5-8 crore over fiscals 2023 and 2024. Moderate utilisation of fund-based limit supports liquidity. Capex is likely to be funded through internal accrual. |
Outlook: Stable CRISIL Ratings believes APL will continue to benefit from increasing geographical presence and diversified product profile while maintaining healthy financial risk profile |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 2000 as Apollo Poly Pipes Pvt Ltd by Mr Sameer Gupta and his brother, Mr Vinay Gupta, the company was reconstituted as a public limited company with the current name in April 2009. APL manufactures pressure pipes (PVC, ring-fit and self-fit pipes), column pipes, casing pipes, plumbing pipes, soil-waste-rainwater pipes, fittings and water tanks. It is part of the Sudesh group. Through a reverse merger with its holding company in November 2017, APL got listed on the Bombay Stock Exchange and the National Stock Exchange. |
Key Financial Indicators
*based on abridged financials | ||||||||||||||||||||||||
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
*Interchangeable with non-fund-based facilities to the extent of Rs 31 crore ^ Interchangeable with fund-based facility to the extent of Rs 35 crore |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||||||||||
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This Annexure has been updated on 03-Jun-2022 in line with the lender-wise facility details as on 30-Jul-2021 received from the rated entity.
*Interchangeable with non-fund-based facilities to the extent of Rs 31 crore
^Interchangeable with fund-based facility to the extent of Rs 35 crore
Criteria Details
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