Accumulate Apar Industries; target of Rs 16,674: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Apar Industries reported strong Q2 results, with revenue growth of 21.3% YoY and EBITDA margin expansion of 164bps YoY, driven by higher sales realizations and profitability across segments.
  • The company's conductors business saw a decline in volumes, but EBITDA/MT improved to INR48,241, supported by better execution of higher-margin orders. The order book reached a record INR120.3bn, including ~INR30bn of overseas utility contracts.
  • The specialty oil business delivered robust profitability, with EBITDA/KL rising to INR23,262, reflecting improved realizations and a strategic shift towards higher-margin customers.
  • The cables business maintained healthy momentum, with 22.1% YoY revenue growth and margins of 11%, supported by strong demand across data centers, renewables, and railways.

Thesis Validation Checklist

  • Investors should watch for volume recovery in the conductors business, driven by customer acceleration of project execution ahead of completion deadlines.
  • The company's ability to maintain premiumization and reconductoring opportunities, supported by revised CEA transmission planning norms and the US SPARC programme, will be crucial.
  • The specialty oil business's margin quality and cash flows will be important to monitor, given the current elevated margins and strategic shift towards higher-margin customers.
  • The cables business's ability to achieve ~25% revenue growth in FY27 and maintain a sustainable EBITDA margin of 11-12% will be key to the investment thesis.