Accumulate Apar Industries; target of Rs 10,353 Prabhudas Lilladher

Prabhudas Lilladher's research report on Apar Industries

Apar Industries (APR) reported 18.4% YoY revenue growth while EBITDA margin declined 118bps YoY to 7.7%. Domestic demand outlook is set to remain robust, supported by continued capex in transmission infrastructure. While exports have been impacted by heightened competition from China, inquiry levels are showing improvement in the U.S. and Europe leading to better anticipated exports in H2FY25. Global reconductoring opportunities are expected to drive growth for conductors, while accelerated execution in the energy evacuation, defense and railway sectors will support growth in the cables segment. Additionally, rising demand for transformers, driven by the energy transition, will further aid growth in the specialty oils business. The company’s strategic focus on high-growth sectors, such as data centers, HVDC, and renewable energy, is anticipated to drive the next phase of growth. We are positive on APR owing to of 1) robust T&D capex driving demand across segments, 2) focus on premium conductors in domestic market, 3) healthy traction in elastomeric cables used in renewables, defence and railways, and 4) market leadership in the growing T-oils business. The stock is trading at a P/E of 44.6x/35.5x/30.2x on FY25/26/27E earnings. We roll forward to Sep’26E and value the Conductors/Cables/ Specialty Oil segments at PE of 39x/43x/17x (40x/43x/17x FY26E earlier). Downgrade to ‘Accumulate’

Outlook

We revise our FY25/26E EPS estimates by -6.2%/-5.1% factoring in lower sales volume and lower export mix impacting margins in the Conductor segment, and downgrade the rating to ‘Accumulate’ from Buy with a revised SoTP-derived TP of Rs10,353 (Rs10,399 earlier).

For all recommendations report, click here