Apar Industries Q2FY24

Apar Industries (APR) delivered a strong quarterly performance marked by significant revenue growth of approximately 21% YoY and EBITDA margin expansion of 193 basis points. Demand for premium conductors remains strong in the domestic market, especially in the TBCB and re-conductor segments. Increased re-run capacity in Q2FY24 led to improved productivity. Cable exports to US and European markets may see a short-term decline in volumes due to inventory depletion, but the mid- to long-term outlook for overall exports remains robust. The cable business is expected to sustain its growth momentum, growing over 40% in H1FY24, driven by strong growth in elastomeric cables (renewable energy, defense, etc.). The company is strategically focusing on expanding the B2C segment by improving distribution and geographical reach. In terms of financial performance, consolidated revenue grew 21.4% YoY to INR 39.3 billion with ladders/specialty oils/cables contributing -49%/-31%/-22% of total revenue. EBITDA grew 54.8% YoY to INR 3.5 billion with EBITDA margin rising to 8.9%. PAT grew -69% YoY to INR -1.7 billion due to higher operating performance and other income despite higher interest expense. In terms of segmental growth, the conductor segment reported a 35.1% YoY increase to INR 19.4 billion and the cable segment grew 15.8% YoY to INR 8.8 billion. Revenues from the specialty oils segment grew 1.9% YoY to INR -12 billion, supported by volume growth of 16% YoY. Over the years, Apar Industries has successfully moved up the value chain, offering superior products and expanding its export presence. The company remains an agent player in the domestic energy sector with a significant portion of its revenues related to energy infrastructure. Apar's focus on value-added products has mitigated the risks associated with a low margin business and positioned it to leverage its range of premium products to capture market share both in India and globally. The company has reaped the rewards of its investments in product innovation and research and development, which is reflected in an increase in the share of premium conductors and a growing export share of both cables and conductors. Apar Industries is highly sought after in traditional sectors such as railways, mining and defence as well as emerging sectors such as green energy, electric vehicles and data centres.

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