This Transformer company, which is a manufacturer of power transmission cables has three business segments which include Transformer and specialty oils, Conductors, and Power/telecom Cables in focus after the company announced capacity expansion.
Price Movement
In Monday’s trading session, Apar Industries Limited’s stock was trading at Rs. 8,800 per share down by 1.60 percent. The stock has delivered a return of around 50 percent in the past year and has outperformed to Nifty Index in the same period. The stock touched a day’s high of Rs. 8,924.95 and now the stock reiterated and was trading at Rs. 8,800 from the previous closing price of Rs. 8,943.05 per share.
What happened
The company has an existing capacity of 7,350 MTPA. They had plans to increase by 5,160 MTPA from November 2024 to March 2025 due to the project being put to use. Now, the company has come up with an additional expansion of 7,980 MTPA which is expected by Q3FY26. The Investment amounted to Rs. 72.55 crore and was procured through internal accruals.
The rationale behind the capacity expansion
According to the National Electricity Plan released in October 2024, a total of 191,474 circuit kilometers of transmission lines and 1,274,185 MVA of transformation capacity for voltage levels of 220 kV and above are planned for addition from 2022 to 2032.
Following the proposed expansion in the Conductor division, the capacity is three times the current capacity, which enables the company to meet the increased demand driven by the government’s focus on power generation. Investment into this segment is to match the demand. Additionally, CRGO (Cold Rolled Grain Oriented) electrical steel is crucial for transformers and reactors, accounting for approximately 33-35 percent of the raw material costs and nearly 50 percent of their MVA capacity.
Management Commentary
Manish Agrawal, the CEO of the Conductor and Telecom division said according to the National Electricity Plan released in October 2024, an addition of 191,474 circuit km – transmission lines and 1,274,185 MVA – transformation capacity for voltage levels of 220 kV and above is planned for the period from 2022 to 2032. We are optimistic about the transmission segment’s prospects in India and globally. This proposed expansion will enhance our market presence in the Conductor division. Additionally, since the customer bases for transformer oil and conductors overlap, we believe we can leverage our leadership in transformer oils to further grow our conductor business internationally.
Financial Performance
Their Q2FY25 results show revenue from operations of Rs. 4,645 crore which increased by 18.34 percent year on year, from Rs. 3,925 crore in Q2FY24 and a 15.80 percent increase from Rs. 4,011 crore in Q1FY25. Their net profit increased by 11 percent year on year, from Rs. 174 crores in Q2FY24 to Rs. 193 crores in Q2FY25. Quarterly, the profits were down by 4.92 percent from Rs. 203 crore.
The debt-to-equity ratio was 0.14 times declined from 0.19 times in FY23. The RoE in FY24 stood at 27 percent improved from 32.28 percent a year ago. However, the RoCE stood at 43.86 percent which has declined from 50.79 percent in FY23.
Revenue Segment
According to the company’s quarterly September 2024 report, they considered revenue from conductors which contributes around 47 percent, transformer and specialty oils contributes around 27.34 percent, Power or telecom cables by around 25.04 percent and others by around 0.66 percent.
Shareholding Pattern
As of September 2024, the shareholding pattern includes promoters holding a major share of 57.77 percent stake in Apar Industries, Foreign Institutional Investors (FII) holding around 10.97 percent, Domestic Institutional investors (DII) standing at 20.41 percent, and public holdings standing at 10.85 percent.
About the company
Apar Industries, founded in 1958, is an Indian manufacturer and supplier specializing in conductors which is the market leader in this segment, India’s largest cable manufacturer, and the world’s third largest specialty oils, and lubricants. Their business model focuses on three main segments conductors, which include aluminum and alloy conductors, transformer oils for renewable energy applications, and power and telecom cables. They focus on innovation, sustainability, and operational efficiency, by serving over 140 countries.
By leveraging advanced manufacturing processes, Apar aims to meet the growing global demand for reliable electrical infrastructure and contribute to its development.
Written by Santhosh S
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