Apar Industries hits new high; zooms 98% in 6 months on positive outlook

Shares of Apar Industries hit a new high of Rs 1,864 as they rallied 5 per cent on the BSE in Thursday's intra-day trade, in an otherwise a weak market, on positive outlook. At 12:27 PM, it was trading 4 per cent higher at Rs 1,835, as compared to 0.55 per cent decline in the S&P BSE Sensex.

In the past six months, stock of the world's largest conductor manufacturer, third largest transformer oil manufacturer, and India's largest renewable cables manufacturer has zoomed 98 per cent. In comparison, the S&P BSE Sensex has gained 14 per cent. Further, in the past one year, it has skyrocketed 145 per cent as against 0.24 per cent rise in the benchmark index.

For the first half (April-September) of financial year 2022-23 (H1FY23), Apar Industries reported 89 per cent year-on-year (YoY) jump in its profit after tax at Rs 225 crore. H1FY23 revenue was up 55 per cent YoY at Rs 6,328 crore with growths coming in from all the three business divisions on the back of higher volumes, commodity prices, and growth in export cable business.

Earnings before interest, taxes, depreciation, and amortization (Ebitda) was up 77 per cent YoY at Rs 476 crore due to higher margins in conventional, premium conductors, increase in cable volume, high oil prices and inventory gains. Ebidta margins improved 90 bps YoY at 7.50 per cent in H1FY23.

The management said the current geopolitical, macro environment and the level of infrastructure spends are providing a better platform for the company. In addition, there is a strong push towards renewable energy across the globe. "We remain optimistic to tap the opportunities coming our way. For the company, the growth drivers remain strong," the management had said.

Meanwhile, on December 6, 2022, Care Ratings revised its outlook on the long-term debt instruments of Apar Industries to 'Positive' from 'Stable', while reaffirming the ratings at CARE A/CARE A1.

"The outlook revision factors expected improvement in business risk profile over the medium term. The Total Operating Income (TOI) increased by 46.1 per cent YoY led by 54 per cent increase in domestic revenue and the export revenue increased by 35 per cent accounting for 38 per cent of TOI," Care Ratings said in its rating rationale.

The ratings continue to factor company's well-established and dominant position in the Conductors, Transformer, and Specialty Oil (TSO) segment, diversified revenue sources, the promoters' extensive industry knowledge, the capacity to increase its product offering and an improved overall performance led by increase in volume and value, it said.

The revision in outlook reflects expected improvement in the business risk profile over the medium term with increase in topline and healthy margins in range of 6.5-7 percent backed by healthy demand and healthy order book. Financial risk profile is expected to remain comfortable with overall gearing in the range of 2-2.3x including LC acceptance. The Outlook may be revised to ‘Stable’ on significant decline in topline and PBILDT margins, or deterioration in capital structure due to increased debt levels or lower cash accruals, the rating agency added.