Nomura keeps its Buy rating on Apar Industries and raises the target price to ₹15,400 after the company delivered a stronger‑than‑expected performance for the June quarter.
Apar Industries reported a 29% year‑on‑year increase in revenue for Q1FY27, while EBITDA climbed to ₹7.6 billion, up 68% YoY and 53% sequentially. The EBITDA margin widened to 11.5%.
The strong performance was mainly driven by the transformer oil (TSO) segment, even though volumes fell 14% because of operational disruptions in the UAE and lower oil allocation in April. Revenue still grew 35%/30% YoY/YoQ thanks to higher gas‑oil prices.
Apar sold low‑cost inventory and its EBITDA/KL hit ₹25,482, a 264% jump YoY. TSO EBIT reached ₹3.3 billion, far above the ₹0.9 billion estimate. The company also set aside a ₹0.9 billion provision for possible inventory losses due to falling oil prices.
The cables business grew 29% YoY, with domestic sales up 60%. EBITDA rose 37% and the margin reached 10.6%, up 60 basis points. The order book for cables stands at ₹19.3 billion, a 16% increase YoY.
Apar now plans to export copper cables to data‑center projects after getting approvals from Meta, Microsoft and Google. US orders are increasing, which should boost exports in the future.
Conductors volumes declined 7% YoY because customers delayed deliveries amid high aluminium prices, but revenue grew 20% YoY due to higher realisations and a premium product mix. EBITDA rose 14% YoY and EBITDA per metric ton was ₹53,418.
Execution visibility remains strong, with operating income of ₹52 billion and order book of ₹102 billion, 57% of which is exports and up 31% YoY. Orders worth ₹28 billion came from two overseas utilities, with 70% executable in 18 months and 30% in 48 months.
Following the quarterly beat, Nomura lifted its FY27 EBITDA forecast by 10% and raised the margin by 64 basis points. The brokerage now expects a 19% EBITDA CAGR from FY26 to FY29.
At present, Apar Industries trades at 22 times FY28 EV/EBITDA.