Apollo Pipes Ltd Management Discussions

An Economic Review

Overview

The global economic landscape in CY 2025 was characterised by moderate growth alongside significant divergence across regions. Headwinds from elevated trade barriers and geopolitical uncertainty were partially offset by strong technology-related investment, broadly accommodative financial conditions and policy support in key economies. Global growth held at 3.4% in CY 2025, broadly in line with expectations1. Conditions shifted materially towards the end of the reporting period, with the outbreak of conflict in the Middle East in late February 2026. The conflict disrupted maritime traffic, pushed energy and commodity prices higher and weighed on inflation expectations globally.

India retained its position as one of the fastest-growing major economies during the year. Real GDP grew at 7.7% in FY 202526, marking the fourth consecutive year of outperformance relative to global peers. Growth remained broad-based, with private consumption contributing approximately 61.5% to GDP2. Government capital expenditure continued to play a meaningful role, rising to RS. 12.2 lakh crore budgeted for FY 20 26-273.

Inflation eased sharply during the year, with average headline CPI at 1.7% for April to December 2025, the lowest level in several years. The Reserve Bank of India reduced the repo rate by a cumulative 125 basis points through FY 2025, bringing it to 5.25%, with the objective of supporting credit growth, investment and household consumption. Lower borrowing costs improved affordability in the housing and

construction segments4

Government-led infrastructure expenditure remained a significant demand driver. The Jal Jeevan Mission, which aims to establish functional tap water connections at every rural household, was extended to December 2028 with an enhanced total outlay of RS. 8.69 lakh crore. This programme is among the largest structural demand drivers for water distribution pipes and plumbing fittings in India.5 Alongside this, continued investments in infrastructure, supported by risk-mitigation measures, asset monetisation and expansion of freight corridors are further deepening construction activity and logistics efficiency, sustaining demand across the piping segment.

Outlook

Indias economic outlook for FY 2026-27 remains favourable, with GDP growth expected in the range of 6.8% to 7.2%. Growth is expected to be driven by strong domestic fundamentals, with consumption maintaining momentum on the back of moderating inflation and improving purchasing power. Government-led capex, with an allocation of RS. 12.2 lakh crore in FY 2026-27, is foreseen to sustain infrastructure activity across key sectors, such as water, rail, housing and roads.6

At the global level, uncertainties have increased, particularly due to geopolitical developments in the Middle East. The West Asia conflict has introduced volatility in energy markets and disrupted supply chains.

For the Company, these developments primarily influence PVC resin prices, given their linkage to global petrochemical cycles. Even as input costs remain subject to fluctuation, the demand environment within India continues to exhibit resilience. Strong government infrastructure spending and consistent construction activity are expected to support healthy volume growth of piping solutions in the year ahead.

Real Estate Sector

Indias real estate sector sustained a positive trajectory through FY 2025-26, buoyed by a confluence of easing monetary conditions, consistent end- user demand and robust institutional capital inflows. With a market value of approximately US$ 585 billion in FY 2026, the sector remains among one of the largest real estate markets in Asia.7

Residential construction, which accounts for approximately 70% of the total market, remained the primary growth driver. The cumulative 125-basis-point reduction in the repo rate to 5.25% improved housing affordability, particularly for middle-income households and firsttime buyers.8 This improved affordability has begun drawing a larger segment of aspirational households into the purchase market, particularly in Tier 2 and Tier 3 cities where rising employment and infrastructure development are expanding the residential catchment beyond established metros.

Alongside office and residential, new-age asset classes such as data centres and logistics warehousing have emerged as fast-growing formats, driven by cloud adoption, e-commerce and digital infrastructure investment. Institutional investment in the sector surpassed US$

7.5 billion in FY 2025, an all-time high, indicating sustained investor confidence across asset classes.9 Global Capability Centres drove approximately 40% of this demand, with Bengaluru, Hyderabad, Delh NCR and Chennai leading absorption.10

Government Housing Programmes PMAY

The Pradhan Mantri Awas Yojana remains the largest government-backed housing demand stimulus. The Union Budget 2026-27 allocated RS. 22,025 Crore to PMAY- Urban, a 179% increase over the prior years revised actuals. It also allocated RS. 54,917 Crore to PMAY-Rural, up 69% over revised estimates.11

AMRUT 2.0 - Urban Water and Sanitation

The Atal Mission for Rejuvenation and Urban Transformation 2.0 places sustained emphasis on strengthening water supply, sewerage and sanitation infrastructure in urban and peri-urban areas. This programme drives direct demand for urban piping and drainage systems alongside the broader residential construction market.

Outlook

Indias real estate market is projected to reach US$ 1,094 billion by FY 2033, reflecting a CAGR of 8.1%.12 This growth trajectory is supported by a combination of structural demand drivers, including urbanisation, rising household incomes, expansion of the working-age population and increasing formalisation of real estate through REITs and institutional capital.

Residential demand is expected to remain steady, supported by improved affordability following recent monetary easing. The transmission of lower interest

into housing demand and construction activity is likely to unfold over a period of two to three quarters.

Commercial and industrial demand is also expected to remain strong, supported by the continued expansion of GCCs, e-commerce logistics and data centre infrastructure. India exhibited the second- highest quarterly GCC leasing volume on record in Q1 2026, with a healthy pipeline of new centre additions. Each GCC development requires full building services infrastructure, including water supply, drainage, HVAC, and fire safety systems, ensuring sustained demand for construction-linked building materials.

Agriculture Sector

Agriculture and allied activities remain instrumental to Indias economic and social structure, contributing nearly one- fifth of the countrys gross value added at current prices. The sector employs approximately 46.1% of the workforce and supports an estimated 55% of the population, making it a critical driver of rural livelihoods and consumption.13 Indias position as the second-largest agricultural producer globally, accounting for 13% of global output, indicates both its scale and strategic importance. This scale creates a clear imperative to improve productivity, enhance efficiency and strengthen competitiveness in both domestic and export markets.

From FY 2025 to FY 2026, the sector expanded by 3.1%, facilitated by a favourable monsoon and stable output across allied segments. Agricultural GVA increased by 3.6% in H1 FY26, compared to 2.7% in H1 FY25, indicating an improvement in output conditions.14 However, the sectors scale continues to necessitate improvements in productivity, efficiency and quality to remain competitive in global markets.

Agricultural performance determines rural incomes, which in turn influence consumption and investment across sectors such as housing, infrastructure and farm development. This interlinkage has a direct impact on sectors such as construction and water infrastructure.

Irrigation As a Core Demand Driver

Despite its scale, a substantial proportion of Indias cultivable land remains reliant on rainfall, leaving agricultural output, rural income and demand vulnerable to monsoon variability. Expanding irrigation coverage is therefore critical to improving productivity and reducing volatility.

The adoption of micro-irrigation systems, including drip and sprinkler, is gaining prominence as farmers seek improved water efficiency and better yields. These systems are inherently dependent on piping networks, with PVC pipes forming an integral part of water distribution from source to field.

As irrigation coverage expands, it is expected to remain a crucial demand driver for PVC pipes. Additionally, evolving trade dynamics, including agreements such as the India- UK Free Trade Agreement, under which around 95% of Indian agricultural exports are expected to receive duty-free access, are likely to support farm realisations and encourage greater investment in irrigation and farm infrastructure.15

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY

The PMKSY is Indias primary irrigation expansioi programme, encompassing water source creation, distribution network development and farm- level application, including drip and sprinkler systems. The scheme brought 95.58 lakh hectares under micro-irrigation. Every hectare added to the micro irrigation16 network require: a defined length of pipe, making this programme a direct and traceable volume driver for the irrigation pipe industry.

Micro-Irrigation Fund (MIF)

The MIF, managed by NABARD, provides concessional financing to states for expanding drip and sprinkler irrigation beyond PMKSY targets. A Micro Irrigation Fund with a corpus of H5,000 Crore has been created with NABARD to facilitate states in mobilising resources for broadening the coverage micro-irrigation.

* Jal Jeevan Mission (JJM)

Extended to December 2028 with a total outlay of RS. 8.69 lakh crore, the Mission targets functional tap water connections for every rural household.

Outlook

Indias agricultural sector is moving towards greater scale and efficiency, supported by the ambition to achieve US$ 100 billion in agricultural exports by FY 2030. Realising this potential requires a sustained shift towards reliable irrigation systems, particularly as a significant gap persists between current irrigation coverage and its full potential. This makes expansion of water infrastructure a key priority area for policy intervention. Sustained focus on irrigation is expected to drive steady investment in water infrastructure over the medium term. The agricultural irrigation segment is projected to remain a key contributor, accounting for 32.48% of the market in FY 2026.17

PVC pipes represent a critical component of this ecosystem, with applications spanning groundwater extraction through borewells, drip and sprinkler irrigation systems and water distribution networks, making them integral to the agricultural value chain. Increasing water stress and declining groundwater levels are leading to deeper water extraction requirements, thereby driving demand for higher-capacity and larger-diameter piping solutions.

PVC Pipes Sector

PVC continues to be one of the most widely produced polymers globally and remains a dominant material for piping applications, owing to its durability,

corrosion resistance, lightweight characteristics and cost-efficiency relative to metal alternatives. The global PVC pipes market, valued at US$ 78.98 billion in CY 2025, continues to expand, facilitated by rapid urbanisation, infrastructure development and increasing demand for efficient water supply and sewage systems. Additional demand continues to stem from the construction, oil and gas, mining and chemical sectors, where PVC pipes are widely used. Asia Pacific is the largest and fastest-growing market, accounting for 58.90% of demand in CY 2025, supported by strong urbanisation and infrastructure investments.18

In India, the plastic pipes industry is estimated at approximately H350 billion. Organised players, with a market share of around 70%, continue to consolidate their position. This is supported by superior quality standards, stronger branding and wider distribution networks. Demand is primarily driven by irrigation, which contributes around 45%, followed by plumbing at 38% and sewerage at 12%, with the other applications accounting for the remaining 5%.

Outlook

CY 2026 is expected to mark a return to volume growth for the sector. The global market is projected to grow from US$

82.86 billion in CY 2026 to US$ 123.79 billion by CY 2034, translating into a steady CAGR of 5.10% over the forecast period. This outlook is supported by a recovery in government-led infrastructure spending, improving housing affordability and the gradual normalisation of channel inventory levels. However, volatility in resin prices remains a critical near-term risk, with input cost unpredictability likely to persist until additional domestic supply is fully absorbed by the market.

Company Overview

Apollo Pipes (BSE: 531761, NSE: APOLLOPIPE) is a leading piping solutions manufacturer with over two decades of experience in Indias plastic pipes and fittings industry. The Company ranks among the top six PVC pipe manufacturers

in India by installed capacity, catering to a wide range of applications across agriculture, plumbing, water management, construction, sewerage and industrial infrastructure.

The Company operates 8 (Six owned, 2 from Subsidiary) owned manufacturing facilities with a combined installed capacity of about 240,000 tonnes. Its manufacturing footprint has evolved from a North India-focused base to a pan-India presence spanning all four regions. This strategic shift towards proximity to key consumption centres has helped optimise logistics costs, improve turnaround times and strengthen the Companys ability to tap demand in underpenetrated markets.

Supported by a robust distribution network of over 1,000 channel partners and 10,000+ customer touchpoints, Apollo Pipes remains focused on delivering innovative, reliable and efficient piping solutions nationwide.

Project Portfolio

The Company offers 3,000+ SKUs across piping systems and allied building material products, enabling it to function as a comprehensive solutions provider rather than a single-category supplier.

STRENGTHS

• Broad and diversified product portfolio catering to multiple applications

• Presence across diverse end-use segments, reducing demand-concentration risk

• Growth supported by rapid urbanisation and expanding infrastructure needs

• Favourable policy environment and regulatory support for the sector

• Adoption of advanced equipment and technology enabling cost- efficient operations

OPPORTUNITIES

• Strong growth momentum in the real estate sector driven by rising housing demand

• Government-led initiatives focused on irrigation and water infrastructure development

• Increasing private sector investments supporting industry expansion

WEAKNESSES

• Limited geographic presence constraining wider market penetration

• Exposure to intense competition from a fragmented and unorganised sector

THREATS

• Volatility in raw material prices impacting margins and cost stability

• Rising interest rates potentially affecting investment sentiment and project execution

Operational Performance

In line with its long-term growth strategy, Apollo Pipes undertook a deliberate strategic recalibration during the year, prioritising market share expansion and portfolio transformation over near-term margin optimisation. The revenue stood at H1,105 Cr, with operational performance shaped by transient industry-wide headwinds, including volatility in PVC resin prices, cautious channel restocking behaviour and a subdued construction and infrastructure spending cycle. Notwithstanding these headwinds, the Company delivered a resilient performance across its core Housing and Plumbing vertical.

The Companys deliberate pricing strategy adopted during the second half of the year has begun yielding encouraging results, with sales momentum accelerating from December onwards and carrying into the subsequent quarter. A major milestone during the year was the commissioning of a new Greenfield plant at Varanasi with a capacity of 18,000 tons. This is expected to significantly strengthen the Companys presence across Eastern India. Concurrently, the Companys Tarapur facility in Western India, acquired through

the Kisan Mouldings integration, is now fully integrated across procurement,

IT, finance and sales functions and is positioned for accelerated ramp-up.

A strategic partnership with Lubrizol, a global leader in engineered polymer solutions, was forged for the supply of CPVC resin based on the proprietary TempRite? Technology. Cost optimisation initiatives continued across manufacturing units through energy-efficient processes, rooftop solar installations and improved operational controls at the shop-floor level.

Financial Performance

During FY2026, the Company operated in a dynamic environment shaped by evolving demand conditions and input cost movements. The focus remained on maintaining operational stability while aligning production, pricing and distribution strategies with market requirements. Revenue from operations for the year stood at RS. 1,105 Cr.

The Company continued to monitor costs and optimise operations in line with market conditions. EBITDA for the year stood at RS. 66 Cr, while Profit after tax was reported at RS. 7Cr.

The balance sheet remained supported by internal accruals and continued financial discipline. Shareholders funds stood at RS. 819 Cr as of March31,2026, while the net debt position remained at RS. 40 Cr, reflecting a calibrated approach to capital structure and liquidity management.

Information Technology

In FY2026, the Company advanced its digital transformation agenda by leveraging technology to strengthen operational efficiency, scalability and integrated decision-making across its manufacturing and distribution network. The integration of the newly acquired Tarapur facility was completed during the year, with full system unification across ERP, finance, procurement, and sales modules, enabling seamless information flow and standardised governance across plants.

Technology investments during the year focused on improving the enterprise technology stack, including upgrades to SAP-based platforms, real-time production monitoring and integrated inventory systems. Shop-floor digitisation through barcode tracking, weighment integration and real-time quality controls improved traceability and compliance across manufacturing units.

On the supply chain side, mobile SAP integration, real-time order tracking and automated procurement workflows improved logistics efficiency, while digital partner platforms enabled faster order processing, invoicing and reconciliation. Cybersecurity and cloud-enabled systems were also refined to support secure operations and improved digital engagement across stakeholders.

Internal Control and Its Adequacy

At Apollo Pipes, the internal control framework is robustly designed to

safeguard assets and ensure that all transactions are duly authorised, accurately recorded, and reported in a timely manner. The system complies with applicable statutory requirements while aligning with global best practices, supporting operational integrity in a dynamic business environment. The framework enables continuous monitoring and evaluation of risks across operational and strategic areas, including research and development, partnerships, and commercial and financial exposures.

It also drives the efficient functioning of accounting and financial processes through periodic reviews of both manual and automated transaction approval systems. Oversight is led by the Audit Committee, which reviews internal

audit plans, evaluates the effectiveness of control systems, addresses audit observations, and ensures timely implementation and sustainability of corrective actions.

Human Resources

The Company recognises that its people form the foundation of its progress. In FY2026, the workforce increased to 719 employees, witRs. 221 new hires to support business expansion and leadership continuity. Investments in structured learning initiatives such as Paathshala,

SAP training and CWB partnerships continued to build capabilities and encourage sustained development. Focused engagement, recognition and capability-building initiatives supported the Companys efforts to attract, develop and retain talent.

Internal mobility was enabled through job rotations, performance-linked progression and cross-functional exposure. Employee engagement was sustained through events, awards and collaborative reviews across levels. Safety continued to be an area of utmost priority, with zero fatalities and regular fire and safety drills being conducted.

Advances in HR digitisation, along with policy enhancements and expanded trainee programmes, supported future- ready talent strategies, fostering a resilient, skilled and motivated workforce aligned with the Companys growth ambitions.

Risk Management

Apollo Pipes operates a structured risk management framework overseen by the Risk Management Committee of the Board, comprising Independent Directors and Senior Management. Functional Heads are accountable for ongoing execution of risk controls within their respective domains.