Buy Apar Industries; target of Rs 2260: Prabhudas Lilladher

Prabhudas Lilladher's research report on Apar Industries

We revise our FY23/24/25E estimates by 40%/30%/24% after factoring in 1) increasing share of premiumisation & exports along with strong volume growth across segments, 2) expanding international footprints and 3) strong outlook for cables business. Apar Industries (APR) reported robust quarterly performance with revenue growing 76.9% YoY and EBITDA margins expanding 360bps YoY, aided by product and geography mix. Conductor segment growth (up 103% YoY) is driven by conventional conductors in exports market and premium products in domestic markets, thereby driving profitability. Cable business is likely to continue with its robust show led by strong demand of elastomeric cables from renewable energy installations, railways & defence. Going forward, conductors and cables business likely to witness strong traction from exports led by increased infrastructure spends in key markets such as USA, Europe etc.

Outlook

We believe, APR’s focus towards value added products and exports business will drive strong topline and profitability in the long run. The stock is currently trading at PE of 13.3x/11.7x/10.3x FY23/24/25E. Maintain ‘BUY’ rating with revised TP of Rs2,260 (Rs1,834 earlier), valuing it at PE of 14x FY25E.