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Export destocking in US/Europe
View Risks →Apar Industries Limited — Q2 FY24
Apar Industries delivered a strong Q2 FY24 with consolidated revenue of INR 3,926 crore (+21% YoY), EBITDA of INR 374 crore (+58% YoY), and PAT of INR 174 crore (+69% YoY).
bullish
high
Financial stats pending filing verification
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Apar Industries delivered a strong Q2 FY24 with consolidated revenue of INR 3,926 crore (+21% YoY), EBITDA of INR 374 crore (+58% YoY), and PAT of INR 174 crore (+69% YoY). EBITDA margin expanded 220bps to 9.5%, driven by premiumization and export mix improvement. The conductor business saw 35% revenue growth with EBITDA per metric ton of INR 39,700, while cables grew 16% despite export destocking. The oil division faced margin pressure from a base oil supply disruption, now normalizing. Management highlighted strong order books (conductors INR 5,977 crore, cables INR 1,000 crore) and robust long-term demand from grid modernization and renewable energy. Key risk: prolonged destocking in US/Europe export markets could slow near-term cable and conductor shipments.
अपार इंडस्ट्रीज ने Q2 FY24 में शानदार प्रदर्शन किया। कंपनी की कुल कमाई ₹3,926 करोड़ रही, जो पिछले साल से 21% ज्यादा है। कमाई में मुनाफा (EBITDA) ₹374 करोड़ (+58%) और शुद्ध मुनाफा (PAT) ₹174 करोड़ (+69%) रहा। मुनाफे की दर 9.5% हो गई, जो पहले से 2.2% बेहतर है। इसकी वजह है प्रीमियम प्रोडक्ट्स और निर्यात में सुधार। कंडक्टर बिजनेस में कमाई 35% बढ़ी, जबकि केबल्स में 16% ग्रोथ हुई। तेल डिवीजन पर दबाव था, लेकिन अब स्थिति सामान्य हो रही है। कंपनी के पास मजबूत ऑर्डर बुक है - कंडक्टर ₹5,977 करोड़ और केबल्स ₹1,000 करोड़। ग्रिड आधुनिकीकरण और रिन्यूएबल एनर्जी से लंबी अवधि की मांग अच्छी है। जोखिम: अमेरिका-यूरोप में निर्यात धीमा होने से शिपमेंट प्रभावित हो सकता है।
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Read Transcript →Quarter Snapshot
Conductor EBITDA per metric ton
INR 39,700
+31% YoY
EBITDA per metric ton for conductors in Q2 FY24, up from INR 30,300 in H1 FY23.
Conductor order book
INR 5,977 crore
+51% export share
Total order book for conductors as of Sep 30, 2023, with 51% from exports.
Cable EBITDA margin
11.1%
+260bps YoY
Cable segment EBITDA margin in Q2 FY24, up from 8.5% in Q2 FY23.
Oil volume growth
18%
+18% YoY
Volume growth in the oil division in Q2 FY24, an all-time high for a second quarter.
What Changed vs Last Quarter
NEW
Full ramp-up of new capacities by FY25
New capacities from the current capex cycle will be fully loaded during FY25, with commissioning expected by Q4 FY24.
NEW
BharatNet participation intent
Apar intends to bid for at least one package in the BharatNet project, which involves end-to-end supply and network operation, though final tender details are pending.
UPDATED
Capex of INR 350-400 crore for FY24
Management expects to spend INR 350-400 crore on capex by end of FY24, with INR 150 crore already spent in H1. The capex is expected to generate revenue of INR 4,000-5,000 crore at current asset turnover ratios.
DROPPED
Conductor volume growth of ~10% for FY24
Management maintained guidance of ~10% volume growth in conductors for the full year, despite near-term export headwinds.
DROPPED
Conductor EBITDA per ton of INR 25,000+ with tailwinds
Guidance for conductor EBITDA per metric ton remains at INR 25,000 plus tailwinds, which are expected to taper over the next two quarters.
DROPPED
Cable EBITDA margin of 10%-12%
Management guided cable division EBITDA margin in the range of 10%-12% for FY24.
NEW RISK
Export destocking in US/Europe
Distributors in the US and Europe are reducing inventory levels, leading to slower order inflows for cables and conductors. This could persist for several months, impacting near-term export revenue.
NEW RISK
Base oil supply disruption
A major base oil supplier faced refinery issues, forcing Apar to buy from the spot market at higher prices, compressing oil division margins. While normalized in September, residual impact may spill into Q3.
NEW RISK
Interest cost increase
Interest costs rose sequentially due to higher discounting, increased volumes, and rising interest rates. Management expects stabilization but higher rates could persist.
NEW RISK
Competitive pressure in US market
Analyst raised concerns about Chinese competitors gaining share in US transformer markets. Management deflected, citing high duties on Chinese products, but did not provide detailed competitive analysis.
RISK GONE
Export slowdown due to de-inventorization in US and Europe
Management voluntarily highlighted that customers in the US and Europe are reducing inventory levels, leading to a temporary slowdown in export orders.
RISK GONE
Potential project delays in US due to high interest rates
Management noted that some large US projects could be pushed back as developers wait for interest rates to decline, which may impact demand.
RISK GONE
Increased competitive intensity from Chinese suppliers
In response to an analyst question, management acknowledged that Chinese competition has increased in markets like Europe, Latin America, and Africa, though not in the US due to tariffs.
RISK GONE
Decline in premium product mix in conductors
An analyst noted that the premium product contribution in conductors fell to 42% from 47% YoY, which could pressure margins if the trend continues.
Fast read
Guidance and risk preview
Management expects to spend INR 350-400 crore on capex by end of FY24, with INR 150 crore already spent in H1.
Distributors in the US and Europe are reducing inventory levels, leading to slower order inflows for cables and conductors.
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