Apar Industries Share Price Analysis 2023 – Should You Buy the Stock
Today’s stock that we are going to talk about is Apar Industries. This Mid-Cap Stock Power Ancillary Apar Industries Share Price has gone up 350% returns in just 1 year! We’ll analyze the good things and bad things about Apar Industries Share Price and will leave the decision for you to make of whether to Buy the Stock or Sell it. The current Apar Industries Share Price is 2,724.00 as of 01st June 2023.
About Apar Industries Share Price
Let’s now talk about the Business of Apar Industries. Established in 1958 by Dharamsinh Desai, Apar Industries is a power subsidiary that manufactures and supplies components like Cables, Conductors, Oils, Lubricants, etc. to the Power Sector.
From railways and infrastructure to transportation to homes, India has one thing in common – high growth! And to propel this growth, power is needed, and this is where companies like Apar Industries come in. Apar has 4000+ global clients in 140+ countries served by its 9 manufacturing plants and 1500+ employees.
About 50% of the company’s revenue comes from the domestic market, and the remaining 50% from exports. Apar Industries has 3 broad business segments Conductors, Specialty Oils & Lubricants, and Power & Telecom Cables. The company has become a market leader in all these segments.
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Business Segments of Apar Industries
01. Conductors Sector
Let us understand the three segments one by one. Apar Industries is India’s largest and one of the world’s largest conductor manufacturing companies with an annual capacity of 1.8 Lakh MT. Their domestic clients include big names like Adani, Torrent, KEC, L&T, and Tata. Apar supplies its conductors to all of the world’s top 25 global operators. Nearly 50% of Apar’s revenue comes from this segment! In this segment, his Rs. 5124 Cr and their Net Order Inflows grew by 110% YoY in Q4 FY23.
02. Transformer Oil Sector
Apar Industries is the 3rd largest manufacturer of Transformer Oil and the 10th largest manufacturer of Lubricants globally. The company has a comprehensive offering of 400+ products that have diverse applications in the Industrial Oil sub-segment. Speaking of its dominance in this segment, Apar Industries is the preferred supplier of over 80% of its specialty oil customers in India.
That is why they have a 60% market share in power transformer oil and a 40% market share in distribution transformer oil in the domestic market. The specialty Oils and Lubricants segment contributes around 31% to Apar’s total revenue.
03. Power and Telecom Sector
Under Apar Industries, it provides specialist technical and cable design services to its customers in the cable segment. From electrical and telecom cables to elastomer and fiber optic cables, Apar manufactures a wide variety of cables. Interestingly, Apar Industries is India’s largest cable player in the renewable sector.
As we shift towards clean and green energy, Apar’s strong presence in this segment can become a competitive advantage for them. The company’s 22% revenue comes from the cable business.
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What we like about Apar Industries
Now let’s talk about the positives associated with Apar Industries. Our fully backward integrated operations support our market-leading position in various segments of immense industries.
Hence, Apar Industries posted all-time-high numbers in FY23 on the back of business efficiency and ongoing tailwinds in the industry. YoY, Apar’s revenue grew by 54%, and profit by 2.5x. Although all three major segments of Apar Industries have seen volume growth in FY23, their cable and conductor business segment has played a role in increasing their exports by over 85%.
In addition, exports contributed around 53% to the company’s total revenue in Q4 FY23 as against 39% in the same quarter last year. That is, the company’s exports have increased rapidly in FY23. Apart from this, in the coming 12 to 18 months, the company is going to do a capex of about Rs 450 crore.
Out of this, 270 crores will be for the cable segment as the management is expecting strong demand in this segment in the coming 1-2 years. Let us now talk about positive things, now let us look at the challenges related to the business of Apar Industries.
What we don’t like about Apar Industries
The very first observable aspect of Apar Industries’ business is its high inventory days. Inventory days tell us the number of days the company can sell its inventory. The lower these are, the more efficient the company is at managing its inventory and selling products.
Those high inventory days indicate that the selling of the company’s products is slowing down or the inventory management is not efficient. Now as you can see, Apar’s inventory days were 108 in FY22, and 88 in FY23. Many industries have to rely on supplier credit and short-term borrowings to support their highly working capital-intensive operations.
In addition, Apar Industries’ key customers are infrastructure companies, which move in sync with the economic cycle. Therefore, the Company’s revenues are highly dependent on the cyclicality prevailing in their end-user industries.