The stock of Apar Industries Ltd, a global manufacturer of aluminium and alloy conductors, is down 19% over the past year amid concerns over a loss of growth momentum driven by tariff-led trade protectionism and slower export order finalizations.
In a recent interaction with PL Capital, the management indicated a soft December quarter (Q3FY26). While orders have not been cancelled, finalizations—particularly in export markets—have been delayed, weighing on near-term execution visibility.
Conductors slow
Conductors account for over half of Apar’s revenue, with around 45% of segment sales coming from exports, including the US. Tariff uncertainty and elevated aluminium and copper prices have lengthened contracting cycles in these markets.
Domestic demand remains supported by power transmission and distribution, renewables and railways. Cost pass-through clauses protect margins, but not timing—meaning profitability is preserved even as delayed order finalizations push deliveries towards the latter part of the year.
For FY26, management has guided for around 10% volume growth in conductors, while treating ₹30,000 as a minimum Ebitda per tonne level over the cycle. In H1FY26, Apar delivered Ebitda per tonne of ₹41,421, aided by a favourable mix. However, management has cautioned against extrapolating peak quarters.
That said, as realisations improve and execution normalises, Apar could see Ebitda per tonne of ₹40,435–44,000 over FY26–FY28E, according to Antique Stock Broking Ltd.
Cables under pressure
Cables, which contribute 25% of revenues, were intended to reduce reliance on conductors but have introduced their own near-term challenges. Exports account for 38% of cable revenues, with a higher dependence on the US, increasing sensitivity to tariff dynamics.
At the same time, margin pressure is emerging as the business absorbs higher fixed costs amid a heavy investment phase.
Apar is executing an ₹800-crore capex for its cable business, with commissioning by FY27 and utilisation ramping up through FY28 to support ₹10,000 crore in revenue capacity.
Speciality oils, which contribute roughly a quarter of revenues, continue to provide stability but offer limited acceleration. While steady, the segment is not a meaningful re-rating trigger at this stage.
Valuation vs visibility
At around 30x FY27 price-to-earnings, Apar trades at a discount to frontline cable peers such as Polycab India (37x) and KEI Industries (40x), according to Bloomberg data.
Over the medium term, sustained global investment in power infrastructure—driven by data centres, renewables and electric mobility—supports demand across Apar’s key businesses. However, near-term earnings growth visibility has weakened enough to test investor patience. Until clarity improves, valuation comfort alone may not be sufficient to lift sentiment.