APARINDS

: Valuation Discount to Peers, Patience Needed for Recovery

, a global leader in aluminium and alloy conductors, has seen its stock fall 19% over the past year amid concerns over slowing growth momentum. Tariff-led protectionism and delayed export order finalizations have clouded near-term visibility, even as domestic demand remains resilient. Heavy investments in cables and muted earnings growth are testing investor patience, despite long-term demand drivers from global power infrastructure. 1. Conductors Segment – Export Headwinds - Conductors contribute over 50% of revenue, with 45% from exports. - Tariff uncertainty and high aluminium/copper prices have lengthened contracting cycles, delaying deliveries. - Management guided for 10% volume growth in FY26, with a minimum EBITDA per tonne of ₹30,000. - H1FY26 EBITDA per tonne was ₹41,421, aided by mix, but management cautioned against extrapolating peak quarters. 2. Cable Business – Heavy Investment Phase - Cables contribute 25% of revenue, with 38% exports, heavily dependent on the US. - Margin pressure is emerging as fixed costs rise during an ₹800 crore capex program, set to commission by FY27. - Ramp-up expected by FY28, supporting ₹10,000 crore revenue capacity. 3. Specialty Oils – Stability Without Acceleration - Specialty oils contribute ~25% of revenue, offering stability but limited growth. - Segment helps cushion volatility in conductors and cables but lacks strong upside potential. - Cost pass-through clauses protect margins but not timing of deliveries. - Antique Stock Broking estimates EBITDA per tonne at ₹40,435–44,000 over FY26–FY28E. - Near-term earnings visibility remains weak due to export delays and investment-led margin pressure. - Apar trades at 30x FY27e P/E, below peers Polycab (37x) and KEI (40x). - Despite valuation comfort, sentiment remains muted until clarity on export orders and capex benefits emerges. - Long-term demand from global power infrastructure supports growth, but near-term patience is required.