Add Apar Industries Ltd For Target Rs. 3,451 By Yes Securities
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Our view
Apar Industries Ltd (APR) reported highest-ever quarterly revenue, EBITDA and PAT, led by growth across Conductors segment (up 41% YoY), Transformers & Specialty Oils (up 27% YoY) and Cables (up 38% YoY). Conductors revenue growth was largely driven by improved share of higher value products and exports. Margins expanded by 460bps YoY owing to higher gross margins and operating leverage benefits. Going forward management expects strong traction in India on the back of robust power demand, power capacity addition, railway infra spending and private capex recovery. On the international front, markets such as USA, Europe, Australia, etc. are expected to witness robust demand as well.
We like the company given its global leadership position, robust prospects of valueadded products, strong positioning across product categories and consistent dividend pay-out. At CMP, the stock is trading at a P/E of 13.9x/10.6x and EV/EBITDA of 7.7x/5.9x for FY24E/25E. We upgrade our FY24/25 earnings estimates factoring in a) higher share of exports and b) rising premiumization within domestic market. We maintain our ADD rating with an upward-revised TP of Rs3,451.
Result Highlights
* Sales came in at Rs40.9bn (up 36% YoY) above YSLe of ~Rs33.7bn led by strong growth in Conductors segment (up 41% YoY), Transformer & Speciality oil segment (up 27% YoY) and Cable segment (up 38% YoY)
* Gross margin expanded by ~490bps/165bps YoY/QoQ to 27.1% in 4QFY23
* EBITDA came in at Rs4.2bn (YSLe Rs2.7bn), with EBITDA margin coming in at 10.4% (~460bps YoY expansion) led by gross margin expansion and operating leverage benefits
* PBT grew by 193% YoY to Rs3.3bn mainly due to robust operating performance despite a 73% YoY growth in Interest cost at Rs791mn.
* PAT came in at Rs2.4bn (vs YSLe of Rs1.4bn)
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