Apar Industries shares tank 20% on disappointing December quarter results

On the margins front, the management said they have seen a drop in this quarter due to unfavourable competitive prices from China and lower exports demand

Shares of Apar Industries tanked 20 per cent to Rs 7,173 on the BSE in Tuesday’s intra-day trade in an otherwise firm market after the company reported a 19.7 per cent year-on-year (YoY) decline in profit after tax (PAT), at Rs 175 crore in the December 2024 quarter (Q3FY25). 

 

The stock hit a seven month low, and was trading at its lowest level since June 2024. It slipped 39 per cent from its 52-week high level of Rs 11,797.25, on January 8, 2025. In comparison, the BSE Sensex was up 1.1 per cent at 76,197 at 01:26 PM. However, in the previous calendar year (2024), Apar Industries had outperformed the market and rallied 71 per cent, as compared to the 8 per cent gain in the benchmark index.

 

In Q3FY25, the company’s revenue was up 17.7 per cent YoY at Rs 4,716 crore, with an annual growth of 31.8 per cent in its domestic business. Exports contributed 33.5 per cent to the company's overall revenues, versus 40.7 per cent in Q3FY24. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin contracted 230 bps to 8.5 per cent in Q3FY25, against 10.8 per cent in Q3FY24. 

 

The company’s pending order book was Rs 7,601 crore, of which export contributed 31.9 per cent. New order inflow was at Rs 3,077 crore, up 62.3 per cent over the previous-year quarter.

 

The management remains optimistic that domestic growth trajectory will remain unwavering led by continued infrastructure capex spend. Headwinds the company faced for export business is expected to reduce gradually, it added. On the margins front, the management said they have seen a drop in this quarter due to unfavourable competitive prices from China and lower export demand.

 

As the largest aluminium and alloy conductor manufacturer and the third largest transformer oil manufacturer, the company enjoys a leadership position in the global markets. Apar Industries also offers over 350 grades of speciality oils, the largest range of speciality cables, lubricants, speciality automotive and polymers.

 

Apar is the market leader across the spectrum of its wide product offerings, the largest player in India’s conductor market; the leader in exports of cables & wires (C&W); and the world's third largest manufacturer of transformer oils, apart from being a leader in the automotive lubricants segment. 

 

Analysts at Nuvama Institutional Equities believe Apar can rake in elevated profitability riding the shift to high efficiency/premium conductors in India’s transmission & distribution (T&D) cycle, while a higher exports mix adds to growth. The company has approximately 50 per cent share in High Temperature Low Sag (HTLS) conductors (ACCC) used for re-conductoring.

 

The C&W segment (fastest-growing among top players over the past seven–eight years at 24 per cent plus) shall compound at 25–30 per cent over FY24–27E as Apar holds approximately 70 per cent market share in wind and approximately 30 per cent in solar. In other power cables, its share is in double digits.  The oils & lubricants segment, meanwhile, shall continue to grow at mid-single digits, the brokerage firm said. Key risks include global shocks, high competitive intensity, adverse working capital management and a slowdown in T&D ordering, it added.