Buy Apar Industries; target of Rs 986: Edelweiss
Edelweiss’ research report on Apar Industries
Apar Industries’ Q4FY18 consolidated revenue jumped 35% (15% ahead of estimate), led by strong ~53% YoY growth in conductors, ~22% in specialty oils and ~20% in cables. EBITDA grew ~28% YoY (~14% above estimates). PAT growth, however, was flat (14% below estimates) on higher interest expense owing to open-period forex (~INR190mn) and higher blockage of working capital due to GST. With capex of ~INR6.6bn incurred in past five years, Apar is well placed to capitalise on the T&D uptick, along with the product mix tilting in favour of value-added high margin HeC, higher KV oils and e-beam cables.
Hence, we estimate PAT CAGR of 32% over FY18-20 & maintain ‘BUY’ with TP of INR 986.
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