Apar Industries hits new high; zooms 53% in 3 weeks on strong Q4 results

The stock hit a record high of Rs 935, surging 8 per cent on the BSE in Wednesday's intra-day trade

Shares of Apar Industries hit a record high of Rs 935, surging 8 per cent on the BSE in Wednesday’s intra-day trade, on expectation of strong earnings growth during current fiscal 2022-23 (FY23). The stock has soared 23 per cent in the past two days, in an otherwise a subdued market. In comparison, the S&P BSE Sensex was down 0.18 per cent at 52,598 points at 11:03 AM.

In the past two weeks, the stock of the electrical equipment company has zoomed 53 per cent after it reported healthy earnings for the quarter ended March 2022 (Q4FY22).

For the quarter, the company reported highest-ever quarterly revenue, up 58 per cent year on year (YoY) at Rs 3,018 crore, driven by strong volume growth across segments. Profit after tax (PAT) jumped 73 per cent YoY at Rs 83 crore. Earnings before interest, taxes, depreciation, and amortization (ebitda) was up 70 per cent YoY at Rs 181 crore and ebitda margin was up 43 bps YoY to 6 per cent versus 5.6 per cent in Q4FY21.

The financial year 2021-22 (FY22) saw smart recovery with revenue up 46 per cent YoY with increase in commodity prices and expansion into export territories. Oils business recorded all-time high volumes at 461,589 kL in FY22, up 16 per cent YoY.
PAT was up 60 per cent YoY to Rs 257 crore with 2.7 per cent margin versus 2.5 per cent in FY21 resulting from lower interest costs and strict financial discipline. EBITDA was up 36 per cent YoY and margin maintained at 6.1 per cent against 6.6 per cent in FY21 despite elevated freight costs and global inflationary pressures in aluminium, copper, steel, base oil & packing materials etc, the company said.

That apart, Apar Industries have robust order book at Rs 3,079 crore for conductors business with 53 per cent share from higher value products. As regards to speciality oils & lubricants business, the company said the outlook for FY23 remains uncertain amidst the Russian invasion of Ukraine and consequent sanctions impact on hydrocarbon products.

Higher prices of finished products due to global inflation and interest rate hikes may impact demand, may result in lower volumes for FY23. The focus throughout FY23 would be on unit profitability versus volume sales, the company said. However, FY23 outlook for cables business remains robust with key strategic initiatives and growing exports opportunities amidst negative China sentiment.

The management remains optimistic on delivering a stronger performance in FY23. "On the conductor front we enter with a strong  order book with higher proportion in premium products and exports. On the cable front there are multiple growth drivers in exports to USA, Australia and Africa increased demand from the railways Defence and non‐conventional energy," the management said in Q4FY22 earnings conference call on May 30, 2022.

The company’s distribution of LDC products will also see sharp increase in growth and increased branding activity to increase overall visibility of production range. The oil business will likely get impacted from the sharp increases in prices but with the vast customer base and applications that we service, we still expect to navigate through this period, the management said.

Apar Industries operates in the diverse fields of electrical and metallurgical engineering. The company is one among the top 3 global leaders in conductors and the 4th largest global transformer oil manufacturer, the largest domestic cable manufacturer in the renewables sector, and a leading player in auto lubricants.