Apar Industries: Prabhudas Lilladher Maintains Buy Rating, Targets Rs 9629

Apar Industries Research Report

Company Overview Apar Industries (APR) is a leading manufacturer of conductors, cables, and specialty oils. Our research report provides an analysis of the company's business outlook, including its exposure to US-Iran geopolitical tensions and domestic demand environment.

Business Outlook The company's direct exposure to the Middle East is limited, accounting for approximately 6-7% of total revenue. Operations remain unaffected due to adequate raw material inventory and incoming supplies. However, if the situation worsens, it could lead to increased shipping costs, insurance, and commodity volatility. Management reiterates guidance of Rs30,000 and tailwinds EBITDA/mt with 10% volume growth in conductors, driven by premium product mix, capacity expansion, and sustained demand from the US.

Segment Performance The cables business is a key growth driver, with 20%+ YoY growth and 11% EBITDA margins expected in the medium term. This growth is aided by capacity expansion (Rs8bn capex), better product mix, and operating leverage. Emerging opportunities in data centers, where cables account for 4-5% of project capex, provide an incremental growth lever over the medium term.

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Valuation The stock is trading at a P/E of 31.0x/26.0x on FY27/28E earnings. We downgrade our rating to 'Accumulate' from 'BUY', factoring in near-term geopolitical tensions and resulting uncertainty. Our valuation of the Conductors, Cables, and Specialty Oils segments remains unchanged, with a PE of 34x/34x/12x Sep'27E. This results in a SoTP-derived TP of Rs9,629.