[SMM Analysis] APL Apollo sees HRC prices rebound amid lower supply, expects demand recovery in H2 FY27

Indian hot-rolled coil prices remained significantly higher on a quarter-on-quarter basis during April–June, although spot values softened from their April highs as elevated prices, seasonal weakness and expectations of a correction prompted buyers and distributors to limit purchases. APL Apollo Tubes said the preceding rise in steel prices supported product pricing and helped increase its gross profit per tonne, despite subdued construction demand and destocking by channel partners.

The company expects its performance to improve in the second half of FY27 as broader macroeconomic conditions turn more supportive and infrastructure-linked demand normalises. Domestic flat-steel availability was also reported to be relatively constrained in parts of the market because of production adjustments and maintenance at some mills, helping limit the extent of the price correction despite weak buying.

Reflecting the softer demand environment, APL Apollo's production declined to 746,000 mt in the April-June quarter from 797,000 mt a year earlier, while sales volumes fell 6% year on year to 744,823 mt from 794,350 mt. Despite the lower throughput, higher steel prices and an improved product mix lifted consolidated revenue 8.5% year on year to INR56.07 billion (US$590 million), while EBITDA increased 10.6% to INR4.11 billion (US$43 million). EBITDA per tonne improved to INR5,522/mt (US$58.1/mt), indicating that stronger realisations more than offset the decline in dispatches.

As one of India's largest structural steel tube producers and a major consumer of HRC, APL Apollo's results provide an important indicator of downstream flat steel demand. The combination of lower production and sales alongside higher profitability suggests that the domestic HRC market during the quarter was characterised by price-led margin expansion rather than volume-led growth. Looking ahead, the company said it expects steel demand to improve in the second half of FY27, supported by government infrastructure spending, an anticipated recovery in construction activity after the monsoon and continued growth in the structural steel tube segment. It also reiterated its long-term positive outlook for HRC consumption, citing India's expanding steel demand and increasing adoption of value-added structural steel products.