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Target: ₹3,725
CMP: ₹2,933.40
We recently interacted with the management of Apar Industries ltd (APR), where they reiterated the strong demand outlook for Conductors and Cables segments, while maintaining modest stance on Speciality oil segment.
Management has guided exports and product premiumisation will be key growth drivers in coming years, conductors division likely to witness strong traction for its conventional conductors from export markets, while domestic market will be driven by product premiumisation, cables segment, on the other hand, will continue with its growth momentum driven by strong growth in elastomeric/E-beam cables from renewables & defence sector and growth in B2C business and speciality oil segment, is expected to witness decent growth in Transformer oil (about 33 per cent segment contribution) while growing modestly in white oil & auto lubricants.
We believe, Apar’s focus towards value added products and strong traction in exports business will drive strong topline and profitability in the long run. Hence, we expect revenue/PAT CAGR of 16.5 per cent/5 per cent from FY23-25, amid high PAT base.
The stock is currently trading at PE of 20.5x/16.3x FY24/25E. We maintain ‘Buy’ rating on stock with SoTP based TP of ₹3,725 (₹3,832 earlier) valuing Cables/Conductors/Speciality oil business at PE of 25x/21x/9x on FY25 EPS.
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