Apar Industries - Premiumisation, Exports To Propel Strong Growth: Prabhudas Lilladher

Prabhudas Lilladher Report

We recently interacted with the management of Apar Industries Ltd., where they reiterated the strong demand outlook for conductors and cables segments, while maintaining modest stance on speciality oil segment. Management guided-

1. exports and product premiumisation will be key growth drivers in coming years,

2. conductors division likely to witness strong traction for its conventional conductors from export markets, while domestic market will be driven by product premiumisation,

3. cables segment, on the other hand, will continue with its growth momentum driven by strong growth in elastomeric/e-beam cables from renewables and defence sector and growth in business-to-consumer business and

4. speciality oil segment, is expected to witness decent growth in transformer oil (~33% segment contribution) while growing modestly in white oil and auto lubricants.

We believe, Apar Industries’ focus towards value added products and strong traction in exports business will drive strong topline and profitability in the long run. Hence, we expect revenue/profit after tax compound annual growth rate of 16.5%/5% from FY23-25E, amid high profit after tax base.

The stock is currently trading at price-to-earning of 20.5 times/16.3 times FY24/25E.

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