Apollo Techno Industries IPO Analysis: A Construction Equipment Makes, Should You Apply?

As the country’s infrastructure grows, Apollo Techno powers the Make in India ambition with its strong underground drill machines.

Let’s explore this upcoming IPO further:

Apollo Techno Industries' share price will be finalised post-allotment, while grey market cues through the Apollo Techno Industries IPO GMP will likely reflect market sentiment closer to listing.

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The Indian construction equipment (CE) industry is a critical component of the nation’s infrastructural development and currently ranks as the 3rd largest globally after U.S & China. The industry is broadly classified into several categories, including: 

• Foundation Equipment

• Trenchless Equipment

• Concrete Equipment

• Material Handling Equipment 
  

The Indian Construction Equipment industry, valued at $9.5 billion in Fy25, is expected to grow at a CAGR of 14% till Fy30.

Apart from that, the construction equipment industry has its own set of challenges and growth drivers listed below: 

Company Origin Story

Incorporated in 2016, Apollo Techno Industries is a Gujarat- based specialized manufacturer of trenchless technology and foundation equipment for the construction industry. Its core product line-up includes Horizontal Directional Drilling (HDD) rigs, Diaphragm Drilling Rigs, and Rotary Drilling Rigs, which are utilised for critical infrastructure tasks such as installing underground utilities and constructing deep foundations for high-rise buildings, bridges, and metro stations. 

It must be noted that Apollo is the only manufacturer of Horizontal Directional Drilling (HDD) Equipment and Diaphragm Wall Drilling Rigs in India.

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So, the company has 3 major product categories as follows:

1. Horizontal Directional Drilling Rig (HDD)

Think of it as a horizontal drilling machine used while laying pipes & cables across hard surfaces such as rocks and ground. Also known as directional boring, this equipment assists in installation processes where trenching or excavation cannot be implemented. Major applications include crossing waterways, roadways, and shore approaches. 

It must be noted that in FY25, the company sold around 52 HDDs. On further analysis, the average revenue from equipment came around ₹1.2Cr.

2. Diaphragm Drilling Rig 

Imagine it as a large crane used in digging vertical spaces on the ground, which is then filled with concrete and other materials, acting as a foundation for any structure. Basically, they assist in constructing diaphragm walls (made of concrete/cement) by making a deep excavation on the surface.

On further analysis, the average revenue from such equipment is estimated to be around ₹4Cr, while the company sold 9 such pieces of equipment in FY25.

3. Rotary Drilling Rig

Now this equipment is similar to the HDD described above; the only difference is that instead of a horizontal drill, this machine is used in a vertical directional drill. They are also specifically built to install piles deep into the ground to ensure support and stability to variety of structures related to Metro, Bridges, and Flyovers.

The company, however, sold only 1 unit of this product, that too in FY23, with the revenue proceeds of around 1cr.

Revenue Analysis:

Let’s check what contribution these products make to the overall topline:

The company has been getting the majority of its revenue from making HDDs, which has been reduced over the past few years. The share of Diaphragm drilling, which has a higher unit-wise sales value of Rs 4Cr, has been constantly rising.

The company also makes some money from ‘other’ product category which involve sales of spare parts such as rods and pumps.    

Apollo get majority of its revenue from the domestic market majorly contributed by states like Gujarat, Haryana, and Delhi. Coming to the export category, the company gets its revenue from the UAE & other middle-eastern country.

(*It must be noted that the company has not yet disclosed its manufacturing capacity utilisation.) 

Management + Promoter Holding

Apollo Techno is led by the Patel family as its promoters, with Parth Rashmikant Patel & Rashmikant Haribhai Patel in leading positions. The management has around three decades of combined experience in the construction equipment industry. 

Management has successfully established a monopoly in domestic HDD & Diaphragm drill manufacturing in India. Apart from that, expansion into the export market, along with the new launch of its diaphragm drill in 2023, showcases the capability and expertise of the management in the CE business.

While 2 out of 5 board members are independent directors, the governance ensures quality as the audit and remuneration committees are led by independent directors. 

From a control standpoint, the promoters hold a dominant 100% stake pre-issue. Post-IPO, this stake will dilute to 73.05%, but promoter influence will remain firmly intact, given their high base ownership and board control.

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Topline has given a moderate 17.5% CAGR from FY23 to FY25, with around 43% revenue growth in FY25. On the basis of 3 months number, the growth in FY26 does not seem to be very convincing. 

Margins jumped sharply, with EBITDA margin climbing from 4.1% in FY23 to 18.3% in FY25, but dropped to a low of 8.5% in the 3M FY26. The margins seem to be volatile on the basis of a sudden rise and then a decrease in the recent numbers.

PAT margins got 3x in the past 2 years, has witnessed a 9.5% drop from Fy25, indicating high volatility. The CFO has been positive, while the working capital days have remained high at 210 days at FY25.

Debt-equity has improved significantly from the past years, currently at 1.2x in 6MFY25. This signals real balance-sheet repair and improved cash generation.

ROE and ROCE stand at 75% and 31%, respectively. The financials witness a surge in ROE & ROCE when compared to FY22. The company has also maintained its current ratio well over the years at around 1.5x.

Peer Analysis

Since the company is the sole manufacturer of HDD and Diaphragm drills in India, no exact competitors exist as now. However, on considering companies from the CE industry as its peers, it can be said that the company has a lower financial quality.

EPW has lower EBITDA & PAT margins with 8.4% and 4.4%, respectively. The company also has lower return ratios than the industry.

In terms of valuation, the company has a high P/E ratio at 41.2x, while the EV/EBITDA stands at 103x. The company has higher borrowings, with a D/E ratio of 1.2x.

Overall, it can be said that the company needs to work on its financial quality and improve its overall financial health, including return ratios and margins.

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The company will be using the proceeds for:

• Funding the working capital requirements of the company.

• Repayment/prepayment, in full or part, of all or certain outstanding borrowings

• General Corporate Purposes

Overall, the issue aims to strengthen Apollo’s day-to-day operations while improving its financial flexibility. The combination of expansion and deleveraging positions the company for more sustainable future growth.

Final Words

At Alpha Venture X Fund, we assess opportunities through our LMVT framework — Leadership, Moat, Valuation, and Tailwinds — enabling us to identify scalable businesses with durable fundamentals.

Leadership: Founder-led with strong industrial experience and equity retention, ensuring aligned execution and focus on scaling the refurbishment business.

Moat: Sole Manufacturer of HDD and Diaphragm Drill in India. Highly niche and entry barrier segment, along with custom engineering provided.

Tailwinds: Low expected infra & capex push by the government, making a cause of concern in the short-to-medium term.

Valuation: The valuation is in the higher range in terms of PE at 41x; the EV/EBITDA ratio is also very high than the industry at 103x.

Bottom Line: Apollo-techno has a monopoly in domestic manufacturing of HDD & Diaphragm drill. The company, however, does not have convincing financials in terms of returns, margins, and valuation. Apart from that, despite the low capex push expected by the government, the company faces competition from Chinese imports and renting or leasing preference for such machines. Apollo-techno infrastructure is a risky bet, making it a selective buy for investment purposes.

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