Prabhudas Lilladher's research report on Apar Industries
Apar Industries (APR) reported a robust quarterly performance driven by strong volume growth, higher exports contribution, increasing contribution of premium products and price pass through. Conductor segment reported healthy volume growth of 63.8% YoY (on low base), while Specialty oil segment volume grew marginally by 0.8% YoY. While exports market likely to continues its strong momentum, domestic conventional conductor is likely to revive in FY23, post challenges faced during Covid years. Transformer Oil is expected to witness stable volume growth in medium term. Management guided for conductor volume to be ~1,30,000MT for FY23, with pickup in conventional conductors. Cables business (20.4% of revenue as on FY22) is likely to grow ~25-30% for FY23, driven by healthy demand for Elastomeric cables from Railways, defense & renewables and strong exports growth. We believe APR’s focus towards value added products and exports business likely to benefit in long run and aid profitability going forward. We revise upwards our EPS estimate by 13.3%/19.7% for FY23/24, factoring in increasing contribution from premium products, expanding international footprints, strong outlook for cables business and management focus on profitable growth.
Outlook
The stock is currently trading at PE of 14.7x/13.2x FY23/24E. Despite earnings revision, we assign ‘Accumulate’ rating on stock (earlier Under Review) with TP of Rs1,194, valuing it at PE of 14x FY24E, given the recent sharp rally in share price.
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