Prabhudas Lilladher recommended accumulate rating on Apar Industries with a target price of Rs 646 in its research report dated November 08, 2019.
Prabhudas Lilladher's research report on Apar Industries
Apar Industries (APR) reported weak set of numbers for 2QFY20. Revenue performance (-3% YoY at Rs18 bn) was impacted due to lower domestic demand, extended monsoon, extreme credit tightness and slowdown in automotive segment. All the segments of the company reported weak revenue performance with Transformers Specialty Oils/Power Telecom Cables were down by 9%/16 YoY and Conductors revenue remained flat. EBITDA margin came in at 6% against 5.8% in 2QFY19. While Interest and Depreciation increased 28%/22%, other income was down 45% YoY. Hence, PBT was down 49% YoY at Rs222 mn. PAT grew by 18% YoY at Rs340 mn mainly on account of lower tax rate due to change in the corporate tax rate. While management remains cautiously positive for 2HFY20, however we believe that the recovery would be gradual.
We have cut our earnings estimates by 19.%/20.6% for FY20/21 respectively. The stock is currently trading at 12x/10x for FY20/21E. We maintain Accumulate rating on the stock with revised TP of Rs646.
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