APL Apollo Tubes Ltd from the iron & steel sector has demonstrated notable technical developments, with the stock consolidating around its 100-day exponential moving average (EMA) for nearly a month. This consolidation phase has resulted in the formation of a rounding bottom pattern on the daily charts, which is typically considered a bullish reversal signal by technical analysts.

Technical Pattern Analysis

The stock has been exhibiting characteristics of a Volatility Contraction Pattern (VCP), where price movements have been narrowing over time. This technical formation suggests that the stock may be building energy for a potential breakout move. The rounding bottom pattern formation indicates that selling pressure has been gradually diminishing while buying interest has been slowly building up.

Recent Price Action

The stock has picked up momentum in recent trading sessions, successfully breaking out from a 2-month consolidation phase observed on the daily charts. This breakout movement suggests that bulls are attempting to take control of the price action, potentially signaling the end of the sideways trading range that has characterized the stock's movement in recent weeks.

Trading Recommendation

Technical analysts suggest that short-term traders can consider buying opportunities in APL Apollo Tubes with specific parameters:

The breakout from the consolidation phase, combined with the VCP pattern formation, provides a technical foundation for the upward price target. The stock's ability to maintain levels above its 100-day EMA during the consolidation period demonstrates underlying strength and suggests that the recent momentum pickup could sustain in the near term.

APL Apollo Tubes Limited , India's leading structural steel tube manufacturer, has announced record-breaking financial results for the second quarter of fiscal year 2026, demonstrating resilience in the face of challenging market conditions.

Key Highlights

• Record quarterly volume, EBITDA, and PAT despite challenging market conditions
• EBITDA spread exceeded INR 5,000 per ton
• Management maintains guidance of 10-15% volume growth for the year
• EBITDA spread guidance of INR 4,600-5,000 per ton for the year
• Working capital days remain at zero as of September 2025
• Return on Capital Employed (ROCE) boosted to 32-33%

Financial Performance

APL Apollo achieved impressive results in Q2 FY26, with EBITDA spreads surpassing INR 5,000 per ton. This performance was driven by several factors:

1. Brand Power: The company demonstrated strong brand leverage in general category products, with EBITDA doubling to INR 3,400 per ton.
2. Value-Added Mix: Improved product mix from Raipur and Dubai plants contributed to EBITDA above INR 5,500-6,000 per ton.
3. Operating Leverage: Gains from achieving over 850,000 tons in quarterly sales volume.

Capacity Utilization and Expansion Plans

The company currently operates at 70% capacity utilization across its 5 million ton capacity. APL Apollo has expansion plans, aiming to add 7 million tons over the next 2-3 years:

• 1 million ton capacity in the Middle East
• 6 million ton capacity in India

This expansion is planned to be funded entirely through internal cash flows, showcasing the company's strong financial position.

Market Outlook and Strategy

Despite challenging market conditions, including heavy monsoons and weak construction activity, APL Apollo maintains its guidance of 10-15% volume growth for the year.

The company is focusing on:

1. Expanding into new markets, particularly in Eastern India and international locations
2. Developing new product applications, especially in heavy construction and renewable energy sectors
3. Leveraging brand power to maintain premium pricing in general category products

Financial Management

APL Apollo continues to demonstrate strong financial management:

• Working capital days remain at zero as of September 2025
• ROCE has improved to 32-33%
• The company plans to use excess cash to reduce liabilities and potentially increase dividends or conduct share buybacks in the future

Conclusion

Despite a challenging market environment, APL Apollo Tubes has shown resilience and growth. The company's focus on brand leverage, value-added products, and expansion into new markets positions it for continued operations in the coming years. Investors may want to monitor the company's ability to maintain its strong EBITDA spreads and execute its expansion plans.