Apar Industries Ltd. share price target

Stiff Competition and GST Impact Lag the Performance; Outlook is Bright:Apars Q2FY18 revenue came in at Rs.12478mn down by 12.4% QoQ and 9.7%YoY on account of lower off-take due to GST impact in the conductors segment and slow execution due to monsoon.

Apar Industries Ltd. (API) is engaged in the business of manufacturing conductors, transformer/specialty oils and power and telecom cable. The company's product portfolio consist of specialty oils, aluminum and alloy conductors, electric and telecom cables, automotive lubricants and thermoplastic elastometers. Quarterly Snapshot (Consolidated):...

Apar Industries Limited (Apar) founded in 1958 by Late Mr. Dharmsinh D. Desai is a wellestablished conglomerate operating in the diverse fields of electrical, chemical and metallurgical engineering. Apar is headquartered in Mumbai and has production facilities...

Stable Revenue Growth, Future Seems Promising: In Q1FY18, Apar reported a very strong YoY growth of 18.1% to reach turnover of Rs.14245mn. EBITDA margins have shown disappointment by declining 256bps YoY to reach 6.6%.

Strong Growth in Profitability: Apar reported a very strong performance in Q4FY17 in respect to margins. EBITDA margins clocking 7.4% marking an improvement of 218bps to reach absolute EBITDA of Rs.1039mn in Q4FY17, representing a growth of 10.5% YoY. Revenues dropped YoY by 4.8% on account oflower revenue in conductors segment offset by robust growth in Cables business. The margins were supported by the change in product mix and increase in sale of premium products of the company.

Transmission capex is the order of the day: APR does not envisage further investments in conductor business. And this is despite working closer to peak capacity utilization. With Jharsuguda plant operational, located in eastern state of Odisha, the cumulative conductor manufacturing capacity is 180k MMTA. In this segment, APR has a fourth of market share. With this plant, company aims to tap the growing demand. And with Greenfield Athola plant, with capacity of 46kMMTA, company has increased moved up the ladder to manufacture High Temperature conductors....

Standalone revenue for 9MFY17 was down by 4.8% to Rs.38223mn essentially due to lower revenues from conductor and specialty oil segments marginally offset by growth in cables segment. However, the profitability has grown significantly for 9MFY17, where EBITDA margin is at 8.3% which is 173 basis points higher than the same period previous year and the profit after-tax margin for YTD is 3.5%, which is about 156 basis points higher than in the previous year.

Revenues Contract But Margins Sustained: The company has reported sales number of Rs. 13817mn showing a growth of15.8% QoQ and 1.7% YoY. Half yearly net sales were showing a decline of 5.6%. EBITDA grew by 12.5% YoY with margins growing by 70bps and 19.0% decline infinance cost boosted PAT by 82.2% to Rs.457mn.

Apar Industries is a Gujarat based, leading manufacturer of conductors, transformer oils & cables for domestic & overseas power T&D; sector. Over the years, company has evolved into a diversified $850mn conglomerate offering value added products & services in the area of power transmission conductors & petroleum specialty products. Company has export presence in about 80 countries which includes Middle East, Africa, Europe, USA etc....

Capacity expansion to derive growth: The company is currently expanding its conductors and specialty oils capacity by adding plants at Jharsaguda (Odisha) and Sharjah (UAE) respectively. The company is currently at 100% capacity utilization in both the segments. Apar is setting up a plant for conductor manufacturing with a capacity of 30000MT per annum on a capex of Rs. 360mn which makes the company a largest manufacturer of conductors in the industry with 180000MT per annum. As per management, the sites will be operational from Oct