Buy Apar Industries; target of Rs 790: Prabhudas Lilladher

Prabhudas Lilladher's research report on Apar Industries

Apar Industries (APR) reported a strong set of numbers led by pickup in Oil & Conductor segment realizations, given better product mix. Conductor segment reported stellar adj. EBITDA per ton of Rs14,243/MT, despite decline in revenue (down 3.6% YoY) owing to increasing share of high value products. Specialty Oil revenue was up 34% over pre Covid level, led by growth in exports and lubricant business primarily driven by export volumes. Going forward, domestic volumes are expected to pickup, as and how automotive segment recovers. Cables segment reported 12% decline in volume compared to pre Covid level, owing to high competition and low domestic demand. Management indicated growth will be driven by higher investment from 1) increasing ESG investment 2) Indian railways 3) Automotive 4) Telecom 5) Defence and 6) exports market.

Outlook

We revise our estimates upwards by 14.4%/13.4% for FY22E/23E and maintain ‘BUY’ rating on the stock with a revised TP of Rs790 (earlier Rs696).