Accumulate Apar Industries; target of Rs 795: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Apar Industries
Apar Industries (Apar) reported 39% YoY growth in Q4FY19 revenues to Rs25bn, higher than our estimate. The top-line growth was driven by 51%YoY rise in Power/Telecom cables segment sales to Rs5.1 bn, Conductors revenues grew 49%YoY to Rs13.3bn while Transformer & specialty oil segment’s sales rose 31% YoY to Rs7bn. However, EBITDA margin fell 163 bps YoY to 5.5% YoY owing to volatility in raw material prices and execution of lower-margin order. PAT for the quarter grew 9% YoY to Rs0.4 bn, in-line with our estimates, largely due to margin contraction, lower interest expense, higher other income and a higher tax rate. The company expects to improve its revenue mix by increasing share of high-margin products in all the three segments in FY20, thus leading to higher profitability. We have raised EPS estimates by 3%/4% for FY20/21E to capture higher revenue growth in FY19.
The stock is currently trading at 14/11x FY20/21E. We maintain our Accumulate rating on the stock with revised TP of Rs 795.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.