APL Apollo Tubes Limited (533758) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Apollo Tubes Limited Q2 FY '26 Investors Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Darshan Mehta from Axis Capital Limited. Thank you, and over to you, sir.

Thank you, Swapnali. Good evening, all. This is Darshan Mehta here, and I welcome you all on behalf of Axis Capital to APL Apollo Tubes Limited Q2 FY '26 Results Conference Call. From the management side, we have Mr. Sanjay Gupta, Chairman and Managing Director; Mr. Rahul Gupta, Director; Mr. Deepak Goyal, Director, Operations; Mr. Anubhav Gupta, Chief Strategy Officer; and Mr. Chetan Khandelwal, CFO. I will now hand over the call to the management for their opening comments. Thank you, and over to the team.

Thanks, Darshan, and thanks, Axis Securities for hosting us for our quarter 2 earnings call. Good evening, everyone, and thanks for attending the call today. We are glad to announce our all-time highest quarterly volume, EBITDA PAT financials for the quarter 2 in a very challenging environment. Why I say challenging? As you all know that the businesses in India, they suffered from heavy monsoon, extended monsoon; and especially construction material sector, which remained pretty weak because of low construction activity across the country. APL Apollo performed on 2 fronts, which is quite commendable. Number one is the sales volume recovery in quarter 2 versus Q1, which was supported by strong capacity utilization in our Raipur and Dubai plants. And secondly was the expansion in EBITDA margins, which took our EBITDA spread above INR 5,000 per ton for the quarter. Now this was on account of 3 main reasons. Number one was the brand power of APL Apollo, which we are able to demonstrate in the EBITDA spreads of general category, which have almost doubled to INR 3,400 per tonne in last 2 to 3 quarters. The selling price for this product, we increased in January of 2025, wherein we were brave enough to take a call that we need to increase our pricing by INR 2,000 to INR 3,000 per tonne, which we did, and the market has absorbed that over the last 9 months, which is clearly visible from Feb to September financials of this calendar year. Second reason for margin expansion was the value-added mix improvement, which is mainly coming from our Dubai and Raipur plant, where the EBITDA per ton on -- for these plants is above INR 5,500, INR 6,000 per ton. And lastly, the operating leverage gains -- as the company is generating 850,000 ton plus volume, there are a lot of costs which get optimized at all the fronts, which also aided our EBITDA spreads. Now first half into financial year of '26, we are fairly confident that we will be able to meet our guidance, which we gave in the quarter 1 call, which was 10% to 15% volume growth and EBITDA spread of INR 4,600 to INR 5,000 per ton. Second half normally is always better compared to H1. As monsoons are over, there is a lot of certainty coming back on the global trade front as well. So given that second half should be better than H1, and if GDP of India surprises positively or performs better than expected, who knows we may even do better than our guidance when we close the financial year. Another positive we want to highlight is that India is seeing adequate steel supply in last 4 to 5 months, which is good for downstream companies like APL Apollo, especially when we are country's largest steel buyers. Our strategy to expand capacity in international markets and Eastern Indian markets remain intact, which gives us confidence that we will be able to grow our volume in double-digit over the next 3 to 4 years on a CAGR basis. Lastly, on working capital front, our working capital days remain in single digit, in fact, 0 as at September 2025, which boosted our ROCE upward of 32%, 33%. And we believe that this is a sustainable ROCE number, which we will keep on showing in years to come. That's all from our side. Happy to take questions now.

[Operator Instructions] The first question is from the line of Sucrit D. Patil from Eyesight Fintrade Pvt Ltd.

My question to Mr. Gupta is as APL Apollo continues to scale volume, what strategic vision do you see driving the next phase beyond just growth towards deeper market leadership or ecosystem influence?

Thank you, Sucrit. Sucrit, our strategy is very clear. Right now, we are close to a capacity of 5 million ton. And in the last 2 or 3 years, we are going to build up the capacity of further 7 million ton. Out of 7 million tons, there is 1 million ton capacity in Middle East. We are putting 1 more plant in Abu Dhabi. [Foreign Language] we are putting 1 plant in Gorakhpur of a capacity of 2 lakh ton per annum; and 1 plant in Siliguri with capacity of 3 lakh ton per annum. So almost this 5 lakh ton and 5 lakh ton in Dubai -- so 7 lakh ton in Dubai, and 5 lakh ton in East market. This is totally new area for us. So we don't see any challenge in this area. Number 2 is the existing setup, we are doing almost close to 3 million ton. And we are targeting to our -- to take to this quantity to 5.5 million ton. In this we have a lot of strategy [Foreign Language] product mix we are developing -- a lot of product mix, lot of new type of products. Like recently, we started our 1,000 [ 1,000 ] square mill, roofing -- we are building some capacity roofing product also. So just we need a tailwind [Foreign Language] we achieve this capacity very soon. Maybe [Foreign Language] challenge I don't feel.

My second question is to Mr. Khandelwal. I believe he's on the call today.

Yes.

Yes, sir. So my question is regards to margins, especially in a volatile input cost environment. Looking ahead, what internal levers or cost management plans do you see most important and all do you have in place?

Power rate...

We are working on the -- mostly, on the 3 front mode. One is the power. Power, how we reduce the unit per ton also, and the cost of the unit also. Both the area. Some is the -- on the freight sector, there we substitute like a [Foreign Language] because now we have all across the country, we have plants [Foreign Language]. And number 3, on the front of our salary cost, we are targeting [Foreign Language] my target is to bring down to INR 600 rupees per ton. [Foreign Language].

The next question comes from the line of Sneha Talreja from Nuvama.

Many, many congratulations on great set of numbers. Just a couple of questions from my end. Firstly, I wanted to understand the EBITDA per ton increase on a quarter-on-quarter basis. While we understand ESOP cost is missing -- but if at all you can quantify what are the other reasons for margin improvement?

So Sneha, it's a mix of 3 things. One is the gross margin improvement, which is around INR 200 per ton. Now that's on account of our brand premiumization and improvement in value-added mix products, right? So INR 200 per ton is coming from there. And then INR 200 per ton is coming from operating leverage benefits as we surpassed 850,000 ton of quarterly sales volume. And INR 100 per ton was on account of lower expense, which we booked in quarter 1 for ESOP. In Q2, it was not there. So this is the breakup of INR 500 per ton improvement in EBITDA.

An extension to your answer, Anubhav you are also estimating your second half to be better. That means your operating leverage should further kick in. So if this is a base level EBITDA per ton of INR 5,200, you're still guiding for a number of INR 4,600 to INR 5,000 on the EBITDA per ton level on an annualized basis. Any reason why you would want to maintain that or not upgrade the EBITDA per ton number? I'm not asking for volume number because -- while I understand the environment is not such, but on the EBITDA per ton purely where you already hit INR 5,200 and assuming there's no one-off here?

[Foreign Language] we have a lot of pressure problem [Foreign Language]. So we don't want to increase [Foreign Language]. But this I am very sure, 10% super growth, almost 3.5 million tonne plus [Foreign Language]. And almost INR 1,700 crore EBITDA target [Foreign Language] God is great.

Perfect sir. I think that answers. Just one or two more questions from my end. Firstly, on the demand front, are you seeing any improvement happening with respect to government CapEx? Any on-ground green shoots that you can see? Because compared to other companies' results, we can make out that there is market share gain at this point of time. But purely on the demand perspective, any green shoots even at this point of time where you can see? And secondly, with respect to spreads -- just finishing it because your spread has further gone up between the primary and the secondary steel, which doesn't seem to be impacting you at this point of time. But how do we see the spread going and impacting you on ground in any way?

Sneha, first is the matter of demand. Demand, very frankly I'm saying [Foreign Language]. But due to our brand leverage, due to our size, due to our systems, we are sustainable. [Foreign Language] is very bad on all 3 fronts. [Foreign Language] like Diwali, Durg puja whatever the holidays, middle of the week or beginning of the week [Foreign Language]. So we are bullish on this front [Foreign Language], we are going to rock. I am just giving my guidelines with the existing [Foreign Language]. Like, in this month also we are going to do 270 -- like 270 -- 275 -- 265, 275 [Foreign Language]. But from November, we are taking a target of 3.25 lakh ton per month; November and December, this quarter we are going to [Foreign Language] I think we hit 9 lakh ton. [Foreign Language].

Lastly, sir, on the spread front for primary and secondary that has been inching up, any way impacting us on ground?

Yes. We have made some strategy on this point, in this subject. Now our APL Apollo brand is not going to talk with the secondary material. [Foreign Language] We'll launch another -- our brand, SG Premium. [Foreign Language] it's like a premium take. [Foreign Language] today, Apollo is higher than almost with all the other brands, INR 3,000 minimum or maybe maximum INR 5,000 to INR 6,000 per ton. Apollo product is costly in the market. Secondly, [Foreign Language] like crying all over the India. [Foreign Language]. So I think this is a good signal for Apollo.

The next question comes from the line of Agrim Kanungo from AK Investments.

Congratulations for a good set of numbers. I would like to ask that as it was mentioned in the PPT, that we plan on spending INR 1,500 crores to expand the capacity. So just a question that how do we plan on financing this? Is it going to be through internal accruals or external sources?

100% will be funded from internal cash flows. If you look at our operating cash flow to EBITDA, that's like above 90%. So this will help us to fund 100% of CapEx, so.

Just one brief follow-up. My main question is that what's the long-term vision of the company? And what would be the projected EBITDA margins that we can expect over the next 5 years?

First for 5 years, we are talking if everything is well. maybe we touch 10 million ton. Right now, we are preparing for 7 million ton [Foreign Language] we are going for outsourcing also [Foreign Language] when we cross 5 million ton. And EBITDA margin, I don't think [Foreign Language]. We don't know what is the scenario [Foreign Language].

Just one last question. What is the current capacity utilization across our different plants? And yes, that's all like.

70%. We are right now 5 million ton capacity. We are going to do this year 3.5 million ton, so 70% capacity utilization we are running.

The next question comes from the line of Aditya Welekar from Axis Securities.

Sir, my question is with respect to the safeguard duty, which was proposed by government. So with the 12% safeguard duty, the downside to the HRC prices is slightly now limited. So does that help us in -- means whatever we see the inventory destocking, restocking. So with the volatility to the downside limited, will it help us going forward because these safeguard duties for the next 3 years. So this is a positive read-through for us. Is that understanding correct?

Yes, 100% you are correct. Like right now, the HR coil for the month of October is close to INR 46,000 per ton landed Ghaziabad or anywhere in the country. Or if we do any import with the duties, it cost us to INR 52,000 or INR 53,000 per ton. So this is not possible to import anything outside of the country [Foreign Language] there is a steel capacity is more [Foreign Language].

Understood, sir. And my next question is on the long-term; means, you have touched that we may go up to 10 million ton capacity. And in the slides also, we have projected that the structural steel tube market will grow by 10% CAGR by 2030. So means what are the long-term demand drivers? Do we really foresee that this market will go up to that quantum by 2030 means consistent double-digit growth, 10% CAGR from FY '24?

Most market is already there. But in India, there is the biggest problem there is a one secondary material is there, which is a very low quality material and [Foreign Language].

The next question comes from the line of Kumar Saumya from AMBIT Capital.

Sir, a couple of questions from my side. So firstly, on the EBITDA per ton. In the general structure, we have seen EBITDA per ton move up from INR 2,700 to INR 3,400. If you could please help me understand what is driving it and how sustainable these are?

Right now [Foreign Language] from January 2025, we are total focusing on our brand leverage and the size leverage. We spread our margin on pricing from others. [Foreign Language].

Okay. We expect [Foreign Language]?

[Foreign Language].

Sir, what is the SD Premium volume that we are doing within the general structure?

10,000 to 15,000 tons between per month.

Per month?

Yes.

And in this SG Premium, what would be the EBITDA per ton that we usually make?

I think we are in almost nil or maybe 500 minus.

So on the blended basis, if we are doing 3,400 then that means rest of the portfolio is...

[Foreign Language].

Sir, lastly, just bookkeeping question. What is the Dubai capacity today, and Raipur capacity as on today?

Dubai capacity is almost 3 lakh ton per annum [Foreign Language] We are very bullish about -- one in Liverpool and one in Antwerp [Foreign Language] 1.2 million ton ABPL and 0.3 million ton [Foreign Language] total capacity of Raipur is 1.5 million ton.

Okay. And utilization at Raipur, sir?

70% [Foreign Language].

And Dubai similar, 70% 75%?

[Foreign Language].

Sir, just for an understanding, when we sell our products in Liverpool, say in Europe, from the Liverpool and Antwerp warehouse, how is the profitability in this market different from the Indian market?

We are already supplying from Dubai. [Foreign Language].

Okay, EUR 50, no?

Yes.

The next question comes from the line of [ Onkar Ghangurde ] from Shree Investment.

[Foreign Language] pre-galvanized coils and pipe, sir?

Sambhv Steel, I don't think pre-galvanized [Foreign Language] but I never move to this type secondary type of material. [Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

No, but to answer your question, EBITDA growth should be higher than the volume growth [Foreign Language].

Sir, that's what I was asking, the EBITDA growth should be higher than the volume growth you are talking about.

[Foreign Language].

The next question comes from the line of Akshay Chheda from Canara Robeco Mutual Fund.

Yes. Sir, just sorry, but again, on this EBITDA per ton only. Sir, actually INR 300 of sequential improvement well taken because of the GP, because of the operating leverage and the ESOP absence. Sir, but then again, on this GP per ton has also improved sequentially by INR 200. So what defines that? Was there an element of inventory gain in this quarter because sequentially, the product mix was adverse. And then -- I mean, sequentially, as the product mix is adverse, so then -- and even the ASP has declined sequentially, still there is an expansion in GP per ton. So was there any element of inventory gain or what justifies this, sir?

Akshay, in fact, I mean, there was some inventory loss only in this GP per ton, which you are seeing because steel prices came down, okay, in the second quarter versus Q1. So there is no inventory gain, in fact, there is some inventory loss, right, miniscule, not too much. Now this GP per tonne expanded because of our value-added mix portfolio, right? Raipur plant and Dubai plant, they both performed pretty well. The volume expansion came maximum from these 2 plants and they all -- and these 2 plants carry EBITDA per ton of INR 6,000. So that helped the improvement in GP per ton. And plus our general category product, which we are selling at higher realization, where we got INR 3,400 per ton EBITDA versus INR 2,800 per ton in Q1.

The next question comes from the line of Andrey Purushottam from Cogito Advisors.

First of all, congratulations for an excellent performance with all the headwinds against you, really well done. And my question, I just want to understand, Anubhav. See, from quarter-to-quarter, your realization per ton has come down, right, in line with what you also said that steel prices have come down. Now you also said that you took a price increase on your general category in January 2025. So does that mean that the increasing EBITDA per ton is also explained by a further drop and a more benign raw material price environment. That's why it has happened. So I'm just trying to reconcile these numbers and get an explanation?

No, because, see, whatever steel price movement is there, it is like 100% pass-through, okay? So NSR increase or decrease is -- the NSR increase or decrease is 100% linked to steel prices. Now for example, if you look at Q1 versus Q2, our NSR declined by INR 5,000 per ton, right? And the steel -- our raw material cost also came down by a similar level, right? The only improvement in GP per ton is INR 200, correct? So in our business model, you will see that steel prices drop or increase leads to same decrease or increase in our NSR. Whatever gap is there, that is on account of our improvement or deterioration in GP per ton in that particular quarter.

So your improved profitability is for the reasons you spoke about earlier, the INR 500 ton improvement on account of operating leverage, no ESOP cost and this was one more factor that you had mentioned. So -- and of course, your slight change in value product mix. These are the essential...

Yes, just to reiterate 3 main factors. Number one, brand premiumization, which you see improvement in EBITDA per ton in our general category. Number 2 is operating leverage gains as we do more and more volume. And number 3 is improving value-added mix portfolio, which is coming from our Raipur and Dubai plants.

Right. And I just had one more question. This is a more general question. If we were to arrive at a deal with the U.S. on tariffs and tariffs were to come down to reasonable levels, let's say, 20%, et cetera, how will that impact our business?

No impact as such because our international sales to U.S. is taking place from Dubai plant. So from India, it doesn't impact.

So you don't see any real risks in the next 6 months to 12 months in this business, right?

Except further deterioration in GDP from existing levels.

So as long as demand remains roughly at the same level as it is now, there is no significant downside that you see?

That's right.

The next question comes from the line of Saurabh Patwa from ASK Investment Managers.

Just wanted to have just a bit broader question on understanding on the EBITDA per ton trajectory. If I see the company from last 10, 15 years history, till pre-COVID, our margins used to be over around like INR 3,000, INR 3,500 range. Post-COVID, I think as the capacity increased and our volumes started to pick up significantly from close to 1.2 million to close to 2 million, our margins improved very sharply, EBITDA per ton. Subsequently, I think while our capacity kept on increasing, I think the utilization level didn't kept pace because the capacity addition was much faster. And that's when the improvement sort of the further improvement couldn't kick in, in terms of operating leverage or gross margin improvement. Also, we got impacted by the macro environment in terms of realization, product mix at some quarters, et cetera. How do you see, sir, things changing there? Because in this quarter, see some -- from the commentary which you have highlighted so far, it appears that you believe that worst in terms of your macro would have been behind, the capacity utilization has reached a decent number and the operating leverage should start kicking in much faster than it would have done in maybe last 2 years or so. Is this a fair understanding, sir? Would be happy to have your thoughts on that, sir?

Saurabh, that's why we always demonstrate this confidence in our business model that it has the ability to generate EBITDA per tonne of INR 6,000 per ton, right? Now we may not demonstrate this number throughout 4 quarters in a year. But on a blended basis for full year, we always wish to have INR 6,000 per tonne of EBITDA spread. Now why we say so? Because if you look at like you said 10-year history, right? Before COVID, we were around INR 3,000 per ton, right, between 2016 to 2020, our EBITDA spreads were around INR 3,000 per ton. And if you look at our capacity expansion speed at that point of time, it was doubling every 3 years, right? We were expanding our capacities every 3 years. Now a lot of upfront costs used to come up, right, which used to depress our margins. And 3 years, continuously, there was demonetization, there was a slowdown in GDP, then COVID came, right? So that put pressure on our capacities, and we had to downsell our product, right? We had to offer discounts to our channel partners. That's why EBITDA per ton couldn't go up. Now what has changed after COVID, one is that slowly, gradually, Apollo brand has started to become strong, right? And we have lowered the discounts which we used to offer earlier. And now we are not doubling our capacity every 3 years, okay? Like earlier, we used to look for 25%, 30% volume growth. Now we are seeing mid -- like double-digit volume growth. And now we are running -- we are chasing profitability. We are chasing EBITDA per ton because that's what we have built our brand now, right? So we have to leverage on that. And secondly, all the new capacity, which is coming up, that's for markets where we are not present, so we don't have to go and offer discounts. Secondly, they are towards the value-added products, okay? So that's why we are confident that the trajectory from INR 3,000 to INR 5,000 per ton in the last 6, 7 years. And the next 4, 5 years, definitely, the trajectory could be from INR 5,000 to INR 6,000 per ton.

Just quickly, so last 3 years, the profit growth, which was slightly below what you would have envisaged and despite sharp -- despite a good revenue growth, do you think -- do you assume -- or do you firmly believe that things would not be the same in the coming next 3 years, probably it should be much, much higher, right?

Definitely, Saurabh. Yes. Because last 2, 3 years, again, we were ramping up our Dubai plant. We were ramping up our Raipur plant, right? So there was some negative operating leverage coming from there. And then FY '25, quarter 2, we took a hit of massive inventory loss, right? So if we -- assuming like steel prices cannot fall again by INR 8,000 per ton from current levels, right? So we may not see the same kind of inventory losses, right? And Raipur, Dubai plants, which were our major capacity expansion in the last 3, 4 years, now they are stabilized. The utilization rates are above 70%. We will not have a negative operating leverage again, right, for the new capacities coming up. So that's why we are confident that EBITDA growth now will be superior than the volume growth.

The next question comes from the line of [ Nishita ] from Sapphire Capital.

Yes. So I had a question. So what is the like split between the Dubai plant and the India plant currently -- the volume, sir?

According to the rate. So Dubai plant is contributing around 8% to the total volume.

Okay. Okay. Understood. So I just wanted to understand, you mentioned that 9 lakh ton is your target for Q3 and around 9.2 lakh tons is the target for Q4 with the EBITDA per ton of around INR 5,000 to INR 5,200. Is that correct?

That's right. If we missed by volume, maybe our EBITDA margin go up.

I am sorry?

Because we are this [Foreign Language] We are not focusing on the volume. We are focusing on the margin.

Okay. Okay. Understood. Understood. So would you like to give any revenue guidance for FY '26?

[Foreign Language].

In quarter 3 and quarter 4 each.

[Foreign Language].

Okay. So in quarter 3 and quarter 4, the target is to be INR 450 crores of top line?

Bottom line, EBITDA margin.

Absolutely, EBITDA.

Okay. Okay. Absolutely, EBITDA, understood.

[Operator Instructions] The next question comes from the line of Angad Saluja from UBS Securities India.

Sir, first question on SG Premium launch. Like how has the feedback been from the dealers on the launch? And what is the largest strategy here that we are sort of trying to achieve? First question is around that.

Angad, there no logic because we have a spare capacity there. We have a spare raw material there and [Foreign Language].

Sir, dealer feedback [Foreign Language] there no negative pushback or anything from a dealer's perspective.

[Foreign Language] if anybody is lifting Apollo 10,000 ton [Foreign Language] I built up my system like that [Foreign Language]. This is the strategy.

Sir just second question, end market demand [Foreign Language] steel demand is likely stable across the board you think [Foreign Language] demand is challenging, [Foreign Language] demand?

[Foreign Language].

The next question comes from the line of Pallav Agarwal from Antique Stockbroking.

Congratulations on a good set of numbers. Just had a question on this inventory. We have had a positive impact of change in inventory. So will any of this reverse in the coming quarters? Or this can -- there will not be any impact in the second half?

So Pallav, steel prices are down only. So there is no inventory gain in the first half.

No, I'm not talking about gain. I'm just talking about the accounts, the change in inventory. So about INR 150 crores of benefit is there, right? So either we have built up inventory or there's been a change in price. So what is actually what has led to this inventory change?

So yes, finished goods stock is down, right? And we have bought some raw material, right, which is -- which you see in the P&L.

Better inventory management.

So you should not see any reversal of this in the next quarter?

No.

Also if you could just share, I think the capacity utilization, you mentioned that Raipur has gone up, I think, on a blended basis. So what was it in the, let's say, in the previous quarters, Dubai is at 85%. So what was this utilization maybe in Q1?

So Q1, Raipur was 55%. Right now, it is around 65%, okay? Dubai was 65% in Q1, and now it is touching 80% in Q2.

The next question comes from the line of Sailesh Raja from B&K Securities.

Sir, you just mentioned we are focusing more on EBITDA per ton than the volumes. So in the same line, I just wanted to know within general category, is it possible to share the volume mix between the products where EBITDA below INR 2,000 per ton and those above INR 2,000 per ton. Has there been any change in this mix compared to last year's same quarter or last quarter? So what is our long-term strategy here?

So that is already given in our presentation, the product mix with EBITDA per ton break up.

No, sir, within general category, I'm asking. Within general category, so we have reported around INR 3,200 in the first half.

Right.

With that -- can you give the mix where EBITDA we might have reported below INR 2,000 per ton and above INR 2,000 ton?

[Foreign Language].

[Foreign Language] When we increased our pricing, it was increased for the whole lot of general category. It starts from range 20...

20 square to 180 square -- 150 square.

Sir, one more last question. Our cash generation is very strong. Even after considering CapEx and dividend, I'm assuming 20% payout, we would be still generating average of INR 400 crores per annum for next 3 years. So we would be sitting with INR 1,200 crores of excess cash. So what is our strategy here? Is there any plan to increase dividend or buyback? Also, if you see our payable is INR 2,300 crores. So instead of holding cash and having -- we have fixed deposit also. So instead of getting yield of around 4%, 5%, can we pay upfront and get more discounts? So what is our strategy here?

First, our strategy is to remove the liabilities from the book and get some more discounts from the suppliers. Number 2, we go for the CapEx [Foreign Language].

The next question comes from the line of Vikash Singh from ICICI Securities.

Congratulations on a very good set of numbers in a difficult time. Sir, my first question pertains to the fact that you said a lot of HRC capacity is coming in India. So will this facilitate you to gain more market share because of the price gap differential coming down? Or there is still a legroom that you get incremental discounts from the steel mills to catch margin? So which should be the better way to utilize this opportunity?

First, both of the ways, [Foreign Language] Maybe they hit the secondary to sell this type of material secondary. [Foreign Language] Number 2, we are the largest buyer [Foreign Language].

So is there more scope to get the benefit out of this overcapacity situation?

[Foreign Language] We are focusing on that.

Noted. Sir, my second question pertains to some of your competitors basically, though smaller in size, I didn't see any volume growth because they didn't have the capacity. They are also primary producers now. Now going forward, they would have the capacity basically cumulatively about 1 million tons. So how should we look the primary competitive -- segment competitive scenario -- because you are saying that you are focusing on profitability but would grow the volume, both can't go hand in hand, right, in case of -- since the demand is not that great, you yourself said.

[Foreign Language] how to be -- we have to do. [Foreign Language].

The next question comes from the line of Udit from Yes Securities.

Congratulations on a great set of numbers. Sir, we clearly understand that you all have been gaining market share. Just if you can throw some light in terms of the new uses that have been coming up, is that also aiding to your volume growth? And if so, then which sectors from where are you getting that incremental demand?

So there are 2 areas where we are working on. Number one is new markets like international markets, we worked upon, right? And now we are going to work on Eastern markets. So Eastern markets and international markets, they are giving us additional volume. In terms of new applications, yes, our products in the heavy construction with the launch of 1000x1000 tube and also some of the products for the renewable sector, where we are able to sell for the structures. So these are the 2 new applications which have come up and increase our sales volume.

Ladies and gentlemen, that was the last question for today. I now hand the conference back to the management for closing comments. Over to you, sir.

Thank you, everyone, and thanks to Axis for hosting us. Look forward to see you next time. Thanks so much.

On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us today, and you may now disconnect your lines.