- Revenue jumped 16.2% YoY, driven by premium conductors.
- EBITDA margin rose 56bps to 8.1%—a rare expansion in a capital‑intensive sector.
- US export headwinds are offset by a Rs5 bn order book and a forthcoming EU‑India FTA.
- Management targets 20%+ cable growth and 9.5‑10% margins by FY26.
- New ‘Buy’ rating with a target price of Rs9,629, up from Rs9,431.
You missed the biggest earnings catalyst in Apar Industries—and here's why it matters now.
Why Apar Industries' Margin Expansion Beats Sector Trends
Most Indian industrial manufacturers are grappling with flat or shrinking margins as raw‑material costs rise. Apar Industries, however, managed to push its EBITDA margin from 7.5% to 8.1% year‑over‑year, a 56‑basis‑point improvement. The lift stems from two core forces: a higher‑priced product mix in the conductors segment and the ongoing migration from traditional ACSR (Aluminium Conductor Steel‑Reinforced) to the lighter, higher‑capacity Al‑59 alloy. Al‑59 not only offers better conductivity per kilogram but also commands a premium price in utility‑scale transmission projects, especially those tied to renewable‑energy roll‑outs.
How the ACSR‑to‑Al‑59 Shift Fuels Conductors Growth
The Indian power grid is in the midst of a massive upgrade to accommodate solar, wind, and storage assets. Utilities are replacing aging ACSR lines with Al‑59 because the latter reduces line losses and eases right‑of‑way constraints. Apar, a long‑time supplier of high‑voltage conductors, has already repositioned over 40% of its output to Al‑59, capturing a larger share of the premium pricing band. This strategic tilt explains the 16.2% top‑line growth and sets a runway for double‑digit expansion as the government’s renewable‑capacity targets double by FY30.
Export Outlook: US Tariffs vs EU‑India FTA for Apar
The cables division faced a dip in Q2 earnings because of weaker export shipments to the United States, where lingering tariff uncertainties dampened order flow. Yet management disclosed a Rs5 bn pipeline of export bookings slated for execution in Q4FY26. More importantly, the recently ratified EU‑India Free Trade Agreement will slash duties on electrical equipment, unlocking a new growth avenue across European grids that are also modernising for clean‑energy compliance. While the US market may stay muted in the near term, the combined effect of the EU‑India FTA and a diversified order book reduces the concentration risk that previously weighed on the cables segment.
Domestic Demand Drivers: Renewables, Data Centres, Railways, Defence
Beyond exports, domestic demand remains robust. The Indian government’s aggressive push for renewable‑energy capacity (300 GW by 2030) translates into higher orders for high‑voltage conductors and specialty cables. Simultaneously, the data‑centre boom—spurred by cloud‑service expansion—needs reliable power infrastructure, a niche where Apar’s premium product line commands a price premium. Railway electrification projects and defence procurement also feed into the same product families, creating a multi‑pronged growth engine that insulates the company from any single sector slowdown.
Valuation Deep‑Dive: PE Multiples and Target Price Logic
Analysts have applied a forward‑looking PE multiple of 34× to both the conductors and cables businesses and 12× to the specialty oils arm, reflecting their differing growth profiles. Using a September‑27E earnings forecast, the composite valuation arrives at a target price of Rs9,629, a modest 2% upside from the prior Rs9,431 estimate. The stock currently trades at a blended PE of 26.1× for FY27 earnings and 22.3× for FY28 estimates, offering a discount relative to sector peers such as Tata Power‑Co (PE ~30×) and Adani Transmission (PE ~28×). The gap suggests the market has over‑penalised recent export headwinds without fully pricing in the premium‑product mix and the forthcoming EU market tailwind.
Investor Playbook: Bull vs Bear Scenarios for Apar Industries
Bull Case
- Continued premium‑product adoption accelerates margin expansion to >9% by FY26.
- EU‑India FTA lifts European export volumes by 15‑20% YoY, offsetting US softness.
- Domestic renewable‑energy pipeline drives a 12% CAGR in conductors demand.
- Share price re‑rates toward a 28‑30× PE as earnings visibility improves.
Bear Case
- Prolonged US tariff disputes erode the Rs5 bn export order book.
- Raw‑material cost spikes (copper, aluminum) compress margins despite premium pricing.
- Delayed EU‑India FTA implementation curtails expected upside.
- Execution risk in scaling Al‑59 production leads to inventory buildup.
Given the current risk‑reward profile, the upgraded ‘Buy’ rating aligns with a near‑term catalyst‑driven upside, while the valuation still leaves a cushion for downside protection.