PL First Cut – Apar Industries (APR) Q3FY24 Result – Strong operating performance; beat on all fronts

*PL First Cut – Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd*

Apar Industries (APR) Q3FY24 Result First Cut – Strong operating performance; beat on all fronts

(CMP: Rs6,058 | Mcap: Rs243bn | Rating: Accumulate)

▪️Consolidated revenue rose 1.9% YoY to Rs40.1bn (PLe: Rs38.5bn; consensus estimate: Rs40.2bn). Revenue mix stood at Conductors ~47%/ Speciality Oil ~30%/ Cables ~22%.

▪️Conductors revenue grew 4.1% YoY to Rs19.9bn, with ~14% YoY volume growth and 28.3% YoY growth in global revenue ex-US. Specialty Oils revenue was flat at Rs12.4bn due to inventory de-stocking by US customers, while ex-US global revenue grew 24.1% YoY. Cables revenue was also flattish at Rs9.2bn with ~8% YoY volume growth.

▪️Gross margin increased by 48bps YoY to 25.9% (PLe: 24.8%).

▪️EBITDA grew 18.0% YoY to Rs4.1bn (PLe: Rs.3.4bn; consensus estimate: Rs3.6bn). EBITDA margin expanded by 138bps YoY to 10.1% (PLe & consensus estimate: 8.9%) led by lower other expenses (down 141bps YoY as a % of sales to 14.0%).

▪️Conductors EBITDA per MT post forex came in at Rs41,530 (PLe: Rs35,500), while Specialty Oils EBITDA per KL post forex came in at Rs8,157 (PLe: Rs5,474).

▪️Conductors EBIT margin came in at 10.5% (down 82bps YoY); Specialty Oils margin came in at 8.7% (vs a low base of 1.7% in Q3FY23); Cables margin came in at 10.6% (down 37 bps YoY).

▪️PBT grew 23.7% YoY to Rs2.8bn (PLe: Rs2.3bn; consensus estimate: Rs2.4bn).

▪️ PAT jumped 28.1% YoY to Rs2.2bn (PLe: Rs1.7bn; consensus estimate: Rs1.8bn), driven by a strong operating performance and higher other income at Rs210mn (vs Rs66mn in Q3FY23), despite higher interest expenses (up 20.1% YoY to Rs1.1bn).

▪️Conductors order book stood at Rs60.8bn (domestic Rs28.9bn; exports Rs31.9bn), with premium products contributing 40.1%.

The stock currently trades at 32.0x/25.6x FY25/26E earnings.