Results on expected lines though I would have expected a higher volume growth from Apollo Pipes given that Finolex Industries grew their pipes & fittings volumes by almost the same % on a much larger base
Gross Margin at 28% has scope for improvement, going fwd even if the lower PVC resin prices continue INR depreciation can hurt the company since they import their RM. That said 28-30% gross margin should be the baseline going forward
Lower EPS anyway is expected due to the capital infusion by promoters. What is more interesting is that their have completed acquisition of the Kisan Pipes unit at Tumkur, Karnataka where they have added 9,000 MT per year at a consideration of 21.5 Cr going by the exchange filing of Kisan Pipes. This also gives them 7 acres of land which can be used for future expansion to tap into the South India market. Once they start sweating these assets from Q2 onward the volume growth for FY20 should trend higher towards 25% and maintain this growth rate through FY21 as well.
Market expects Apollo Pipes to grow much faster than industry and also build some margin comfort due to the increased scale. Let’s see how things actually pan out, if not for the high growth trajectory this does not look like a great story
Disclosure: Invested for self and customers