Apar Industries Q3 Review - Decent Quarter Excluding U.S. With Healthy Profit Growth: Prabhudas Lilladher

Prabhudas Lilladher Report

We revise our FY24/25/26E earnings per share estimates by 17.6%/6.6%/9.8%, factoring in strong outlook in the conductors segment. Apar Industries Ltd. reported revenue growth of 1.9% YoY, while Ebitda margin expanded by 138 basis points YoY. Although U.S. demand remained sluggish due to inventory de-stocking, enquiry levels are picking up with improvement expected in FY25.

On the other hand, strong domestic demand continues to offset weak U.S. sales. Apar stands to benefit from transition from ACSR to AL-59 alloy conductors given better margin profile and higher technology barriers in making AL-59 conductors.

Meanwhile, transformer oils will be the main growth driver in specialty oil segment owing to strong electricity demand, healthy order books of global transformer original equipment manufacturers and Apar’s market leading position.

Cables business outlook is also healthy with growing demand for elastomeric cables from wind, solar, railway, defence, mining, etc.

We believe Apar's focus towards -added products and strong traction in exports business will continue to drive strong topline and profitability in the long run.

The stock is currently trading at a price/earning of 30.1 times /23.4 times FY25/26E.

We roll forward to Dec-25 and maintain an ‘Accumulate’ rating with a revised target price of Rs 6,890 (Rs 5,630 earlier) valuing conductors/cables/specialty oil segments at 27 times/33 times/12 times Dec-25E (25 times/32 times/12times Sep-25E earlier) owing to a robust business outlook across segments.

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