The agency has reaffirmed the rating on the short-term facilities and commercial paper of the company at 'CRISIL A1+'.

CRISIL said that the outlook revision factors in the healthy scale-up of APL Apollo driven by strong volume growth. APL Apollo continues to be the market leader in the ERW pipes segment with a current capacity of 41 lacs and revenue of Rs 16,000 crore.

In the fiscal 2023, APL Apollo registered revenue growth of approximately 24%, primarily driven by 30% volume growth. Earnings before interest, tax, depreciation, and amortisation (Ebitda) per tonne improved to approximately Rs 4,500 from approximately Rs 3,000 per tonne pre-Covid, given addition of value-added products to the portfolio. Volume growth will remain healthy at 25-30% in fiscal 2024 while Ebitda per tonne will improve to Rs 5,000.

Financial risk profile remained strong, backed by healthy capital structure as indicated by debt to Ebitda ratio of 0.8 times for fiscal 2023. Debt protection metrics remained strong interest coverage ratio of above 15 times in fiscal 2023.

Liquidity also continues to be comfortable, with cash and equivalent of above Rs 350 crore and sustenance of cash and carry model lowering working capital requirement.

Financial risk profile is expected to remain stable with expected net cash accrual of over Rs 800 crore in fiscal 2024, which will generate significant surplus over the medium term.

The ratings continue to reflect the leadership position of APL Apollo in the electric resistance welded (ERW) pipes and structural products industry, and diversity in terms of geographical presence, product profile, and end-user industries. These strengths are partially offset by exposure to intense competition and to volatility in the prices of raw material as well as finished goods.

APL Apollo is the largest and one of the fastest-growing ERW steel tubes/structural products manufacturers in India, with a current production capacity of 41 lakhs MTPA.

The company reported 24% rise in consolidated net profit to Rs 201.8 crore on a 5% increase in net revenue to Rs 4,431.1 crore in Q4 FY23 as compared with Q4 FY22.

The scrip rose 0.66% to currently trade at Rs 1320.45 on the BSE.