In everyday terms, a conductor is like a bridge for electricity. It helps electricity flow smoothly from one place to another. Think of it as a pipeline for power, making sure everything gets where it needs to go without any hiccups. These conductors are used in all sorts of things, like power lines, transformers, and even the wires that charge our phones.

Now, let’s talk about Apar Industries. They’re a big company that specializes in making these conductors. In fact, they’re known for being the world’s largest manufacturer of aluminium and alloy conductors. This means they make a lot of those bridges for electricity!

But that’s not all Apar does. They have different parts to their business. They also make special oils for different industries, cables for transmitting power, and cables for connecting phones and the internet. With so much experience behind them, Apar is a trusted name known for quality and innovation.

The stock of the company has witnessed an electrifying return over the years. The stock has surged almost 190 percent over the last year. It has also given a multibagger return of almost 1,420 percent when looked at over a period of three years.

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So, in this article, we’ll take a closer look at Apar Industries. We’ll explore what they do, how they’re doing financially, and what their plans are for the future. So, let’s dive in and learn more about this company and how they keep the world powered up.

Corporate Overview Of Apar Industries

APAR Industries was started in 1958, in India. Over 60 years later, the company has grown into a diversified $1 billion company, and expanded to over 140 countries as a highly trusted manufacturer and supplier of conductors, transmission cables, specialty oils, polymers and lubricants.

It is the first Indian wire and cable company to venture into the harness segment for diverse applications such as electric vehicles (EV), solar energy, locomotives and more. The company is exporting to over 140+ countries globally. Not only that, it is also a pioneer in transformer oils in India having over 60% market share in power transformers.

Business Segments Of Apar Industries

Conductors

Apar Industries is a leading global maker of conductors. From FY 2016 to FY 2023, ₹433 crore was spent on strategic capital expenditure to launch innovative solutions in the space.

The company has successfully embarked on a premiumisation exercise to reinvent its business, adding copper conductors for railways, copper transpose conductors for transformers, OPGW wires for power and telecommunications, a comprehensive range of high efficiency conductors including turnkey solutions, and a range of aluminium alloy rods for special applications.

In FY 2023, these premium products account for 45% of revenue. The globalization strategy has also resulted in 51% of income originating from outside the Indian market. 

Specialty Oils

The firm is the world’s third largest transformer oil manufacturer and India’s tenth largest lubricant marketer. This gives the company an edge in terms of economies of scale for manufacturing and distribution, which adds to the premiumisation of the oil sector.

During fiscal year 2016-23, the corporation invested ₹250 crore in higher value items. In FY23, this category accounted for 32% of overall revenues. 

Cables Segment

The firm is the largest domestic renewable energy player and India’s leading exporter of cables and wires. The company is the largest domestic renewables player, offering one of the most diverse ranges of medium- and low-voltage XLPE cables, elastomeric cables, fibre optic cables, and specialty cables.

Over FY16-23, ₹397 crore has been invested in developing new-age solutions. In FY23, this segment accounted for over 23 percent of total revenue.  

Financials Of Apar Industries

FY2023FY2022FY2021FY2020
Revenue (in ₹crore)14,3529,316.576,388.027,425.45
Net Profit (in ₹crore)637.72256.73160.5135.15
ROE32.28%16.48%12.51%11.41%
ROCE50.79%26.80%22.17%28.03%

In the fiscal year 2023, Apar Industries saw a substantial increase in revenue, surging by 54% to reach ₹14,352 crore as opposed to ₹9,316.57 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 25% in revenue.

The increase in revenue was due to the growth coming from all the divisions on the back of higher volumes and growth in export of cable and conductor business.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 148% increase from ₹256.73 crore in FY2022 to ₹637.72 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 68% CAGR.

The stellar increase in the profitability was on the back of high margins in conventional conductors, higher share of premium conductors, increase in cable business and overall increase in exports.

In FY23, Apart Industries maintained favourable financial metrics with a Return on Equity (ROE) of 23.24% and Return on Capital Employed (ROCE) of 21.11%.

Future Plans Of Apar Industries

Strong Growth Drivers Intact 

Despite facing some short-term challenges, such as the disruption caused by the situation in the Red Sea, APAR Industries Limited remains optimistic about its future performance. 

The company believes that the long-term growth drivers it has been discussing over the past few quarters remain intact, positioning it for continued growth in the coming quarters.

Robust Order Book 

APAR Industries Limited’s order book stood at a healthy INR 6,081 crores for its conductor division, with approximately 40% of the orders comprising premium products. 

While a slowdown in order inflow from the U.S. market due to inventory rationalization was observed, this was offset by strong domestic demand. The company’s overall order book reflects the healthy demand for its products and provides visibility into future revenue streams.

Expanding Capacities

To cater to the anticipated growth in demand, APAR Industries Limited has been steadily expanding its production capacities across its business segments. 

The company plans to invest around INR 300 crores annually in capex to debottleneck existing facilities, undertake brownfield expansions, and set up new greenfield plants. 

These capacity additions will enable APAR Industries to meet the growing demand for its products, both in the domestic and international markets.

Positive Outlook across Segments 

APAR Industries Limited expects its conductor business to grow at around 15% in volume terms in the upcoming fiscal year, driven by the transition from ACSR to AL-59 alloy conductors in the domestic market.

The cable business is targeting a growth rate of 20-25%, fueled by increasing demand from sectors such as wind, solar, railways, and defense.

Meanwhile, the transformer oil segment, the company’s lead product in the oil vertical, is expected to witness double-digit growth, supported by the ongoing expansion of transmission and distribution infrastructure in India and abroad.

Conclusion

With robust growth drivers, a strong order book, expanding capacities, and a positive outlook across segments, Apar Industries seems well-positioned for continued success. As the company leverages its expertise and diversified offerings, it will be interesting to see how it capitalizes on the opportunities ahead. 

What are your thoughts on the future prospects of Apar Industries? Do you think the company can maintain its impressive growth trajectory?

Written by Nalin Suriya

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