Surya Roshni slips 18% on heavy volumes; APL Apollo down 7% as Q3 sales dip

APL Apollo said Q3FY22 sales volume of 402,729 tons declined QoQ due to channel de-stocking in anticipation of steel price correction and extended monsoons, which impacted the construction activity.

Shares of Surya Roshni slipped 18 per cent to Rs 480.20, hitting an over six-month low on the BSE in Monday’s intra-day trade on the back of heavy volumes. The stock was quoting at its lowest level since June 10, 2021. With today’s fall, it has corrected 45 per cent from its record high level of Rs 868.40 touched on October 4, 2021.

In the past three months, the market price of Surya Roshni has declined 40 per cent, as against a 0.34 per cent rise in the S&P BSE Sensex. At 01:35 pm, the stock was trading 9 per cent lower at Rs 530.75, as compared to 1.4 per cent rise in the benchmark index. The trading volumes on the counter jumped over 10-fold with a combined 1.31 million equity shares having changed hands on the NSE and BSE.

Surya Roshni, the steel pipes & strips business manufacturer, produces a wide range of products and is the largest manufacturer of GI pipes in India and is the largest exporter of ERW pipes. The business has further strengthened with setting-up of 3LPE Coating facility unit in 2018 (mainly to cater to the oil & gas, and CGD sector), whereas being one of the largest lighting companies in India, the lighting business manufactures an array of conventional to modern LED lightings. The consumer durable business offers a variety of fans and home appliances.

For the quarter ended September 2021 (Q2FY22), Surya Roshni had reported a single digit or 5.7 per cent year on year (YoY) growth in its consolidated net profit at Rs 44 crore, due to higher operational costs. Revenue, however, grew 41.6 per cent YoY at Rs 1,946 crore.

However, continuous input cost pressures, prolonged rains across the country and higher shipping freight due to shortage of containers and port congestion kept the margins suppressed. Earnings before interest, taxes, depreciation, and amortization (ebitda) margins declined to 5.24 per cent from 7.35 per cent in the previous year quarter.

Meanwhile, shares of Apollo Tricoat Tubes and APL Apollo Tubes were down 8 per cent and 7 per cent at Rs 811, and Rs 933, respectively, in an otherwise firm market.

APL Apollo Tubes, a leading structural steel tube manufacturer, today announced that October-December (Q3FY22) sales volume of 402,729 tons declined quarter on quarter (QoQ) due to channel de-stocking in anticipation of steel price correction and, extended monsoons, which impacted the construction activity. Moreover, the sales volume in the general segment (commoditized sales) was impacted due to a rise in price gap between primary steel and scrap steel, which benefited the unorganized sector, the company said.

However, the management said it is encouraged to see strong sales growth in the heavy structural steel tubes segment, which it expects to drive company’s margins going forward.