APARINDS - Apar Industries Ltd Share Price

In the Q1 FY'26 earnings call, APAR Industries Management provided a strong outlook, driven by notable revenue growth of 27.3% year-on-year, reaching Rs. 5,104 crores, with a profit after tax of Rs. 263 crores, marking a 30% increase year-on-year. The EBITDA rose 27% to Rs. 501 crores, reflecting a margin of 9.8%. Looking ahead, the management emphasized positive growth in the domestic sector and highlighted that export revenues accounted for 31.6% of overall turnover.

Major forward-looking points mentioned by the management included:

1. Renewable Energy Growth: India's renewable energy sector reported a 24% growth in power generation in H1 2025, the best semi-annual growth since 2022, thus reinforcing APAR's market positioning.

2. Conductor Division Performance: The revenue grew 43.9% year-on-year, with a strong domestic order book and an order book totaling Rs. 7,779 crores. New orders received during the quarter were Rs. 3,135 crores.

3. Cable Segment Prospects: The cable division saw a growth of 36.3%, totaling Rs. 1,419 crores, with exports to the US growing significantly, reflecting strong demand due to impending tariff changes. The current pending order book for cables stands at Rs. 1,653 crores.

4. Projected Capex: The management outlined a planned capital expenditure of Rs. 1,300 crores, with Rs. 150 crores already incurred, and expects an additional Rs. 350 crores within a few months to enhance capacity.

5. Tariff Landscape: The management acknowledged uncertainties around US tariffs affecting exports but remained optimistic about the long-term demand in the energy sector, particularly in the context of increased investments in renewable energy infrastructure.

6. Guidance on Growth: The management reiterated a target of 25% value growth in the cable segment, primarily driven by domestic demand and the anticipated recovery post-tariff clarification.

Overall, the management's outlook signals confidence in maintaining growth momentum amid evolving market dynamics and regulatory environments.

Question 1: "My first question is with respect to the Conductor Division. We have seen the realization as close to 43,000. My question is how sustainable are these levels or should we stick to the earlier guided range of 30,000 plus tailwinds?"

Answer: We maintain that our guidance for the Conductor Division revolves around 30,000 plus tailwinds. While external factors can influence this, the mix of premium and non-premium products, geography, and metal prices dictate realizations. As such, it's prudent to stick with the original guidance.

Question 2: "On the U.S. growth this year in the Conductor Division, it's close to 83%. Can we assume that this is also because of the pre-buying?"

Answer: Yes, to some extent, the growth is influenced by pre-buying due to uncertainty around the duty structure. Customers are seeking early deliveries, which propels our U.S. sales.

Question 3: "When we look at your export mix on a quarter-on-quarter basis, it has still not moved that much as a share in conductors. Is this analysis correct?"

Answer: Yes, your analysis is accurate. The domestic market has driven growth during this quarter, and while our exports are stable, our focus has been on meeting domestic demand effectively.

Question 4: "What is the rate of duty when we export to the U.S. and the other players export to the U.S.?"

Answer: Our products are subject to a reciprocal tariff of 10%, along with existing duties of about 5%. Each country's duty rates vary, impacting our competitive stance.

Question 5: "When you talked about demand from the U.S. market for cables, have you seen any change in the competition intensity?"

Answer: Competition remains intense, particularly with subsidized imports from countries like China. We focus on our differentiation through product quality while enhancing efficiency to mitigate competitive pressure.

Question 6: "In terms of our cable segment, can we assume the same kind of volume growth going forward?"

Answer: While we don't report specific volumes, we project strong domestic demand for cables due to ongoing projects in sectors like data centers and renewable energy, supporting our growth outlook.

Question 7: "Can you elaborate on the transformer oil business and series of postponements in orders?"

Answer: The transformer oil segment, while experiencing delays in execution due to external projects in markets like Saudi Arabia and Australia, still holds a robust order book indicating future growth possibilities.

Question 8: "Are you still guiding for 25% value growth in the cable segment despite tariff-related uncertainties?"

Answer: Yes, we are maintaining a guidance of 25% value growth in the cable segment. Market dynamics may cause fluctuation, but overall, we expect continued strong performance.

Question 9: "What are the anticipated impacts of geopolitical tensions on our business outlook?"

Answer: Geopolitical tensions present uncertainty, especially tariffs impacting our import costs. However, the demand for our products in renewable energy remains strong, providing some buffer against these fluctuations.

Question 10: "Are you considering local manufacturing in the U.S. in light of tariff changes?"

Answer: We are assessing local manufacturing opportunities, but current tariff complexities require more clarity. Our focus remains on evaluating options based on market conditions and future cost structures.