Prabhudas Lilladher's research report on Apar Industries
We revise our FY26/27E EPS estimates by +11.0%/+2.7%, factoring in strong domestic macro tailwinds and further recovery in the demand from the USA and downgrade our rating from ‘Accumulate’ to ‘Hold’ due to sharp run up in the stock price. Apar Industries (APR) reported 27.3% YoY revenue growth while EBITDA margin declined 53bps YoY to 8.9%. The strong topline performance was underpinned by sustained domestic demand and some prebuying in the US amid tariff-related uncertainties. The management reiterated their guidance of ~10% volume growth in the conductors segment, driven by favorable macro tailwinds such as reconductoring opportunities, strong public capex and energy transition. Meanwhile, capacity expansion in the cables business is anticipated to support management’s target of ~25% revenue growth in FY26. The specialty oils segment faced near-term challenges due to project delays in key export markets, including Saudi Arabia, South Africa, and Australia. Nevertheless, robust global demand for transformer and automotive oils is anticipated to offset these temporary headwinds. Heightened Chinese competition in non-US markets remains a key risk.
Outlook
We value the Conductors/Cables/Specialty Oils segment at a PE of 35x/35x/12x Mar’27E (30x/30x/10x Mar’27E earlier) arriving at a revised SoTP-derived TP of Rs9,540 (Rs7,825 earlier). Downgrade to ‘Hold’.
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