Apar Industries - Bright Prospects For Conductors, Cables: Yes Securities

Yes Securities Report

Over the years, Apar Industries Ltd. has commendably moved up the value chain by offering superior products and increasing its export footprint.

Apar continues to be a proxy play on the domestic power sector as a huge chunk of its revenues are linked to power infrastructure. The company’s focus on value-added products will help it mitigate the risk from lower-margin business and help it gain market share both in India and globally on the wings of its wide array of premium products.

The company is reaping the benefits of product innovation and investment in research and development in the form of higher share of premium conductors and growing share of exports in both cables and conductors. Additionally, it enjoys strong traction in sunrise sectors such as green energy, electric vehicle, and data centres along with traditional sectors such as railways, mining, and defence.

At current market price, the stock trades at a price/earning of 14.5 times/11.1 times and enterprise value/Ebitda of 8.0 times/6.2 times for FY24E/FY25E. We maintain our 'Add' rating on the stock with a revised target price of Rs 3,451.

We reassign it a target multiple of 13 times FY25E (versus 12 times earlier) based on the strong pipeline and near-term visibility for both conductors and cables, both in India and overseas.

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