Key Takeaways
- India’s power‑grid expansion and renewable surge are fueling a 6‑fold earnings jump for Apar Industries in four years.
- Premium‑segment focus in conductors and cables gives Apar pricing power versus commoditized peers.
- Transformer‑oil business delivers stable cash flow, insulating earnings from export volatility.
- ICICI Direct forecasts a 21% compound annual growth rate (CAGR) FY25‑28, implying a 35× FY28 earnings multiple at a 12,750‑rupee target.
- Risks: lingering US tariff after‑effects, competitive pressure from Tata Power‑Cable and Adani’s renewable‑grid push.
Most investors missed the silent surge in India’s power‑infrastructure demand—your portfolio may be under‑exposed.
Why Apar’s Conductor Leadership Matches the Power‑Grid Boom
Electricity consumption in India is projected to grow above 7% per annum, driven by industrial expansion, urbanisation, and aggressive renewable‑energy targets. The government’s “Green Energy Corridor” program alone envisions an additional 150 GW of transmission capacity by 2028. Conductors—high‑grade copper and aluminium wires—are the backbone of this expansion. Apar Industries commands the most profitable domestic and export segments, focusing on premium‑grade conductors that command higher margins than the crowded, low‑cost segment.
Premium‑segment focus means Apar can price above raw‑material cost swings, a distinct advantage when copper prices fluctuate. This strategic shift mirrors a broader industry move: firms that abandoned the “volume‑at‑any‑cost” model have outperformed peers during commodity cycles.
Wind‑Solar Cable Opportunities: Apar’s Play in Renewable Grid Integration
India’s renewable‑capacity target of 450 GW by 2030 requires specialised cables that can withstand higher thermal and mechanical stresses. Apar has replicated its conductor playbook in the cable business, securing contracts with major wind‑farm developers and solar‑park operators. Compared with Tata Power‑Cable, which still leans heavily on conventional power‑distribution cables, Apar’s renewable‑cable portfolio enjoys faster order‑book growth and better pricing.
Historically, when India’s solar installations surged in 2016‑18, cable manufacturers that pivoted to solar‑grade products saw revenue multiples expand by 1.8×. Apar is positioned to repeat that pattern.
Transformer Oil: The Steady‑Cash‑Flow Engine
Transformer oil is a niche but cash‑rich business: it requires high‑purity mineral oil, a product with limited substitutes. Apar’s dominance here provides a recurring revenue stream that smooths earnings volatility from export swings. Even as US‑China trade tensions dented Apar’s US orders last year, transformer‑oil sales kept EBITDA margins above 20%.
Definition: Transformer oil is a dielectric fluid used in high‑voltage transformers to provide insulation and cooling. Its demand is tightly linked to new sub‑station roll‑outs, a metric that the Ministry of Power projects to grow at 10% annually.
Competitor Landscape: How Tata and Adani React
Tata Power‑Cable has announced a 15% capacity expansion in its aluminium‑cable line, aiming to capture low‑margin bulk orders. However, Tata’s pricing power is weaker because it targets cost‑sensitive utilities. Adani’s recent acquisition of a renewable‑grid asset chain gives it vertical integration, but its cable and conductor capabilities are still nascent. Both peers are chasing market share, yet neither matches Apar’s premium‑segment depth.
Valuation Snapshot: 35× FY28 EPS—Is It Justified?
ICICI Direct places Apar at a 29× FY28 EPS today, with a target price of INR 12,750, equivalent to a 35× FY28 multiple. The premium reflects the 21% CAGR projection, driven by:
- Accelerating domestic conductor demand (estimated 9% YoY growth).
- Renewable‑cable contracts contributing 12% of revenue by FY28.
- Stable transformer‑oil cash flow adding 5% EBITDA contribution.
For context, the average P/E of the Indian metal‑fabrication sector sits near 20×. A 35× multiple suggests the market is pricing in a “growth premium” rather than pure value.
Investor Playbook: Bull vs. Bear Scenarios
Bull Case: If India’s grid‑expansion schedule stays on track and renewable‑cable orders accelerate, Apar could deliver EPS growth above 25% annually, justifying a 40× FY28 multiple and pushing the stock toward INR 14,500.
Bear Case: A resurgence of US tariffs or a sharp copper price surge could compress margins. Additionally, if competitors win large renewable‑cable tenders, Apar’s premium‑segment pricing may erode, capping growth at 15% CAGR and forcing the multiple down to 25×, implying a price nearer INR 9,800.
Strategic takeaway: Consider a phased position—initial exposure at current levels, with incremental adds on pull‑back, and a protective stop around INR 9,500 to guard against downside.