All Cargo Logistics
There are signs that the global supply chain industry will expand in the second half of 2024.
Freight rates are still rising despite container capacity increasing by 1 million TEU this year.
Warehouse capacity is declining in major countries and inventory is being replenished due to increased actual consumer demand and expectations of a recovery in demand.
The Express business has seen significant improvement due to cost reductions implemented in each month through March, resulting in a healthy withdrawal rate of operating costs.
Apkotex Industries
Apkotex Industries expects revenue of Rs 18-20 billion and profit margins of 12-14 percent over the next three to five years.
Management believes that EBITDA margins of 12-14% are sustainable.
The next stage of growth will be driven by exports, whose share is expected to rise from 30% to 50% over the next three to five years.
The management expects to incur capex of Rs 200-350 crore in FY25, which also includes maintenance capex.
Management remains optimistic about a recovery over the next nine to 12 months.
Apkotex, along with other companies, is in talks to apply for anti-dumping duties against NBR.
Recently, the lengthening of export receivables has impacted the working capital cycle.
APL Apollo Tube
For FY24, APL Apollo Tubes (APAT) missed guidance by 13% primarily due to slowdown in consumer activity impacting production of around 100,000 tonnes, delayed ramp-up at Raipur and Dubai plants impacting production of around 100,000 tonnes and weak third quarter performance.
Despite the lack of guidance, overall performance remained strong with volumes up 15%, EBITDA up 17% and PAT up 14%.
Operating cash flow to EBITDA has been above 90% throughout, indicating good cash flow generation.
The company aims to increase its return on capital to 35-38 percent.
APAT is confident of achieving an EBITDA of Rs 5,500 per tonne once production crosses the 5 million tonne mark, and is targeting an EBITDA margin of Rs 10,000 per tonne and a production capacity of 10 million tonnes.
The current value addition mix is 60% for FY24. APAT plans to increase this to 70-75% once it achieves the 5 million tonne target.
APAT demands at least 4-5% higher prices than its competitors for its products.
Solar Torque Tubes have become a vital element in the solar industry. The world is moving towards tracked solar systems. Tracked solar systems should only be built on tube structures. APAT is working with all the leading solar power manufacturers to develop tracked structures with the help of tubes.
Apollo Pipe
During FY19-24, the company’s volumes grew at a CAGR of 15% and revenues grew at a CAGR of 22% during the same period. The company expects revenues to grow at a CAGR of 25% over the next 3-4 years due to expansion of organic and inorganic production capacities, entry into new markets and a positive demand outlook.
Apollo Pipes is actively working to strengthen its presence in the domestic market with greenfield expansion plans in Varanasi, brownfield expansion plans at its Dadri facility and the acquisition of Kisan Mouldings playing a key role in expanding its operations across India.
In the medium term, we plan to adjust our product mix towards plumbing pipes by expanding our product portfolio and expanding our production capacities.
The company recently acquired the legacy brand of Kisan Mouldings, which has a production capacity of 60,000 tonnes, a wide dealer network and a diversified product portfolio. After modernisation and efficiency improvements, the company is targeting a turnover of around INR 9,000 crore and an EBITDA margin of 10%.
3M India
In India, production in the PV segment is expected to grow by 5-8% in FY25, with electrification of cars and upscale SUVs expected to boost revenue streams for 3M India.
* Local value addition across all segments accounts for around 60% of total sales and has grown by 100-125 bps over the last 4-5 years.
* Automotive outlook is expected to grow at around 3-5% in FY25, however, strong performance is expected due to penetration in various segments. Revenue growth opportunities are expected to come from safety and industrial business.
* As most of the production in China is for the domestic Chinese market and internal exports to 3M are minimal, it would be possible for customers to shift their purchasing base from the Chinese market to the Indian market, thus establishing production capacity in India.
* 3M is working closely with emerging and existing OEMs to develop products tailored to OEM models, with developments expected to be solidified within the next 18 months.
360 One
The new HNI business segment will be launched in its existing footprint in the initial phase.
The economics of the HNI business will improve primarily due to the distribution-led model, which will lead to higher customer retention.
Over the next three to four years, the C/I is expected to improve to 44-45%, before settling at 42-43% in the long term.
As for AMC, the company plans to continue to focus on alternative products and its institutional business, rather than retail.
Action Construction Machine
The company predicts that the cranes, material handling and agricultural products sectors will see growth of 15-20% compared to the previous year for FY2013, while the construction machinery sector will see growth of 30-40% compared to the previous year.
The company expects its revenue to grow 15-20% year-on-year in FY25, with the potential for further margin expansion, and is targeting a doubling of revenue growth over the next two to three years.
The new emissions standards are expected to affect at least 50% of the company’s portfolio, and volumes may also decline slightly.
The company has indicated it plans to acquire smaller companies with quality products abroad, through which it can sell some of its selected export products, separate from its own products which it manufactures in its own assembly plants.
Ashok Leyland
Management noted that demand in the traditional ICE segment, particularly in trucks and buses, is strong. Tractor-trailer volumes are gaining market share from the multi-axle segment, and the school bus segment is seeing strong growth.
Ashok Leyland (AL) expects to maintain EBITDA margins in the medium term on the back of cost reduction strategies, growing volumes and stable steel commodity prices. AL has implemented price hikes of 1.5% in the MHCV segment and 3% in the LCV segment.
Management plans to expand the sales network from 250 to 750 stores over the next two to three years, and ultimately to 1,500 stores.
Scrapping policy is progressing slowly and recovery will take a long time. 50% of trucks are below BS IV emission norms, creating an opportunity for replacement.
Since the cost of BS IV vehicles is 20% lower than BS VI, it will be difficult for BS VI operators to hike fares.
Astral
Astral has set a medium-term goal of doubling its revenue over the next five years.
This target is based on expected volume growth in the pipes division and continued growth in the adhesives, sanitary ware and paints divisions.
This growth is expected to be driven by the establishment of two new facilities in Hyderabad and Kanpur, which will significantly strengthen Astral’s brand presence in these regions and enable the company to reach new markets and customer base.
The company has a presence in eight high-growth segments: pipes, water tanks, adhesives and sealants, construction chemicals, bathroom supplies, paints, specialty wall materials and infrastructure products.
Astral plans to launch OPVC pipes in Q3 FY25. The OPVC segment is expected to grow faster compared to the building materials segment owing to its high acceptance in large infrastructure projects and cost advantage over ductile iron pipes.
In addition to its core business of pipes and adhesives, Astral is also focusing on the water tank business, which is expected to grow significantly over the next two to three years, further diversifying the company’s revenue streams and strengthening its market position.
Aurobindo Pharma
On a consolidated basis, the company expects high single-digit revenue growth and EBITDA margin of 21-22%.
The API business is expected to grow in the low single digit range.
US generic drug price declines have moderated as smaller companies that were driving price declines (in the 5-10% range) are no longer able to supply products due to rising prices, leaving customers looking for reliable suppliers.
Some products are in short supply, but we are supplying as many as possible.
Revlimid is a late entrant and has not contributed significantly to the company’s performance. The company’s revenue is in double digits and is expected to increase slightly in FY2025.
The company’s strategy is to grow based on its overall portfolio (658 approved ANDAs, 172 pending) and not rely on any one product.
All EU businesses are doing well and will continue to grow.
With revenue run rates remaining stable at this level, the company has no intention of acquiring brands in India due to high valuations and long payback periods.
