ICICI Direct Recommends Buying Apar Industries, Targets Price of Rs 12,750

Apar Industries: Riding the Growth Wave in Conductors, Cables, and Transformer Oil

Apar Industries is poised to benefit from a trifecta of growth drivers: increasing electricity demand, transmission, and renewables. The company's leadership in conductors, cables, and transformer oil enables it to capitalize on these secular trends. Apar Industries services the most profitable segments and markets within conductors and cables, with a strong presence in the domestic market and exports.

The company has successfully shifted its focus to the premium segment of the domestic conductor market, while also ascending to the top in the cables business in wind and solar markets. Its dominance in transformer oil brings in steady cash flow, contributing to its impressive earnings growth of 6x over the last four years.

While exports, particularly to the US, have faced some weakness in recent times due to tariff headwinds, these challenges are now behind the company. We expect Apar Industries to capitalize on this opportunity and achieve a 21% Compound Annual Growth Rate (CAGR) over the period of FY25-28E.

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Valuation

The stock trades at 29x FY28E Earnings Per Share (EPS). We initiate coverage on Apar Industries with a BUY rating and a Target Price (TP) of INR 12,750, valuing the company at 35x FY28E EPS.