Apollo Pipes Ltd

Apollo Pipes Ltd — Trading Window closed from October 1, 2026 until expiry of 48 hours after declaration of Financial Results for the quarter and half-year ended September 30, 2026

Target overview

• Target: Mazzini Tiles LLP, India-based tiles and ceramics manufacturer.
• Manufacturing facility located in Morbi, Gujarat.
• Turnover for FY2025-26 was Rs 87.15 crore.

Deal terms

• Acquired 76% stake and profit sharing rights.
• Cash consideration of Rs 40.42 crore.
• Acquisition completed.

Strategic rationale

• Expands Apollo Pipes into tiles and ceramics within building materials.
• Provides immediate manufacturing base and market access.
• Supports product expansion, channel development, and exports.

Background & scale

• Incorporation date: 5 April 2017; country: India.
• FY2023-24 turnover: Rs 78.23 crore; FY2024-25: Rs 76.67 crore; FY2025-26: Rs 87.15 crore.
• Presence primarily Morbi, Gujarat; sector tiles and ceramics.

Subsidiary incorporation

• Apollo Ceramics Limited is incorporated as a wholly owned subsidiary of Apollo Pipes Limited.
• Date of incorporation: September 17, 2026, in India.
• Apollo Pipes Limited holds 100% equity in Apollo Ceramics Limited.
• Authorized capital: Rs 100 crore.
• Paid-up capital: Rs 0.5 crore across 50,000 shares.
• Industry: building materials; tiles and ceramics manufacturing, trading, marketing and distribution.
• Regulatory approvals: not required for incorporation.

Resolutions

• Item 2: Preferential issue of Fully Convertible Warrants (special resolution) for up to ₹189.10 crore.
• Objects amended to invest in subsidiary(ies) for tiles and ceramics business.
• Utilization: proceeds to be deployed by Oct 2028, subject to warrant conversion.
• Post-issue diluted share capital: 4,91,48,206 equity shares; promoter 49.71%, public 50.06%, non-promoter non-public 0.23%.
• Outcome: not disclosed in corrigendum.

Rating Action

• Long-term rating: Crisil AA-/Stable; upgraded from Crisil A.
• Short-term rating: Crisil A1+; upgraded from Crisil A1; watch removed.
• Outlook: Stable.
• Total bank facilities rated: Rs 280 crore.

Rating Agency

• CRISIL Ratings Limited.

Rationale highlights

• Strong SG group support and chairman alignment enhances governance.
• Established market position; capacity expansion to 284,000 TPA in FY2027.
• Financial risk profile remains strong: gearing ~0.1x; interest cover >7x.
• FY2026 revenue declined to Rs 1,105 crore; Q1 FY2027 revenue Rs 295 crore.
• EBITDA margin 6.0% in FY2026; expected 7-8% with stabilization.
• Vulnerability to PVC resin price volatility, forex fluctuations, and competitive intensity.

Key metrics

• PAT FY2026: Rs 5 crore; PAT margin 0.4%.
• Cash accrual FY2026: Rs 59 crore; capex funded by internal accrual and equity.
• Cash and equivalents: Rs 82 crore as on 31 Mar 2026.
• Capex to be funded via internal accrual and equity.

Outlook and sensitivities

• Outlook: Stable.
• Upward: volume growth >15% with KML capacity ramp.
• Downward: sustained margins below 8%; debt-funded capex.

Material changes since last rating

• Upgraded from Crisil A to AA-/Stable; removed from Watch.

Resolutions

• Item 1: Ordinary resolution to increase authorised capital to Rs 60 crore and amend MOA.
• Item 2: Special resolution to issue up to 31,00,000 FCWs to Non-Promoter category.

Key terms of resolutions

• Warrants: up to 31,00,000 FCWs at Rs 610 per warrant.
• Aggregate size: up to Rs 189.10 crore.
• Conversion: 1 share per warrant on exercise.
• Floor price: Rs 610; Relevant Date: Aug 31, 2026.
• Upfront payment: 25% on allotment; balance on exercise.
• Warrants tenure: 18 months; lapse if unexercised.
• Post-issue ranking: pari passu with existing shares.
• Proposed allottees: Non-Promoter category; eight entities.
• Post-issue promoter holding: 49.71%; non-promoter 50.29%.

Proceeds, monitoring & timelines

• Use of proceeds: funding subsidiary for tiles/ceramics up to Rs 189.10 crore.
• Utilization target: by Oct 2028.
• Monitoring: CARE Ratings; quarterly reports to exchanges.

Shareholding impact

• Promoter stake may decrease; non-promoter stake rises post-issue.

Funding and subsidiaries

• Investment plan up to ₹300 crore to set up tiles and ceramics subsidiaries.
• Authority to MD and JMD to implement within plan.

Warrants details

• Up to 31,00,000 Fully Convertible Warrants at ₹610 each, total ₹189.10 crore.
• Warrants convert 1:1 into equity shares within 18 months.
• Issue price includes ₹600 premium; cash consideration.
• Non-Promoter category identified for preferential allotment.

Capital structure changes

• Authorized share capital increased from ₹50 crore to ₹60 crore; MOA amendment subject to approval.

Allottees and post-issue

• Non-Promoter allottees: AGDG Enterprises LLP, Rachita Gupta, Gaurav Arora, Rohit D Gupta.
• Further allottees: Anshvardhan Modi, Poonam Patel, Ekta Tayal, Sukumar Srinivas.
• Post-issue stakes total 6.31%.

Approvals

• Approvals required: shareholder approval and other statutory/regulatory approvals.

Other notes

• No cancellation or termination of proposal.

Meeting Details

• Board meeting scheduled for 31 August 2026; time and venue not disclosed.

Key Agenda Items

• Proposal to raise funds via issue of equity or convertible securities (P/R/QIP) subject to approvals.