Apar Industries shares surge post 15% fall; where's stock headed?

Shares of Apar Industries Ltd climbed 6 per cent in Wednesday's trade, a day after plunging 15 per cent, as a couple of brokerages suggested targets on the stock that hinted a decent upside ahead. Analysts said Apar Industries' focus towards value added products and strong traction in exports business will drive strong top line and profitability in the long run.

The stock rose 5.64 per cent to hit a high of Rs 2,747.90 on BSE. This is against a 14.78 per cent drop in its shares on Tuesday.

Prabhudas Lilladher said it has revised its FY25 estimates for Apar Industries by 11.2 per cent, given strong exports outlook with further penetration in high growth markets along with robust cable segment outlook amid high elastomeric cables contribution. Apar Industries reported strong quarterly performance with revenue growth of 36 per cent YoY and Ebitda margin expansion of 461 basis points (bps) YoY, Prabhudas Lilladher said.

“Conductor revenue was driven by demand for conventional products from export markets and domestic demand for premium product. Cables business will likely continue its growth momentum, with growth in elastromeric cables (driven by renewables, railways and Defence) and focus on Anushakti brand," it said.

The brokerage, which has a target of Rs 3,832 on the stock, said exports outlook for conductors and cables segment continues to remain strong with increasing spends on power infrastructure in geographies.

YES Securities finds the stock worth Rs 3,451. It noted that Apar Industries reported highest-ever quarterly revenue, Ebitda and PAT led by growth across Conductors segment (up 41 per cent YoY), Transformers & Specialty Oils (up 27 per cent YoY) and Cables (up 38 per cent YoY). Conductors revenue growth was largely driven by improved share of higher value products and exports, it said while it attributed high margins to operating leverage benefits.

"We like the company given its global leadership position, robust prospects of value-added products, strong positioning across product categories and consistent dividend payout. At CMP, the stock is trading at a P/E of 13.9 times/10.6 times and EV/Ebitda of 7.7 times/5.9 times for FY24E/25E. We upgrade our FY24/25 earnings estimates factoring in higher share of exports and rising premiumisation within domestic market," it said.

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