Apar Industries Q1 FY27 earnings call

Apar Industries reported its highest-ever quarterly sales and profit in Q1 FY27, with consolidated revenues growing 29.1% YoY to INR 6,591 crores and Profit After Tax (PAT) increasing 77.7% to INR 467 crores. The EBITDA margin expanded to 12.4% from 9.8% a year ago, representing a 260 basis point improvement. This robust performance was achieved despite external challenges^🌐 such as the U.S.-Iran war, logistics difficulties in export markets, and manpower shortages in May, demonstrating strong execution and risk management capabilities.

The conductor division's revenues grew 19.9% to INR 3,338 crores, despite a 6.7% volume decline attributed to customer delays in manufacturing clearance due to a surge in metal prices. The higher contribution from the premium segment, which accounted for 50.3% of overall revenues (up from 43.7% a year ago), significantly boosted EBITDA, which grew 14% to INR 285 crores. The division secured new orders worth INR 5,245 crores in the quarter, including large multi-year contracts exceeding INR 2,800 crores from two major overseas electric utilities.

The oil division's revenue increased 34.7% YoY to INR 1,701 crores, even as volumes declined 13.7% due to restrictions at the UAE facility and Hamriyah port closure. Despite a provision of INR 94 crores made due to sharp crude oil and gas oil price fluctuations, EBITDA surged 214% to INR 329 crores, representing a 290% increase over the sequential quarter. The EBITDA margin reached INR 25,482 per kL, significantly higher than INR 7,004 per kL a year ago, primarily due to premium pricing on historical cost inventory during a period of rising prices.

The cable division recorded a 29.5% revenue growth to INR 1,838 crores, with domestic revenue up 59.9%. While export revenue declined 13.7%, US revenue grew 2.5% year-on-year. APAR secured crucial approvals from major electrical contractors for data centers of Meta, Microsoft, and Google, enabling the company to participate in both aluminum and copper cable RFQs in the US market. The cable order book stands at INR 1,925 crores, providing coverage for the current and coming quarter's requirements.

Apar Industries' strategy to focus on premium products in the domestic market and standard products for export contributed to improved profitability. The wires portfolio, a relatively new segment, saw sales grow 46% YoY, driven by a 17% increase in active towns, 25% in distributor additions, and 51% in retail account presence. The B2B channel business also grew 92% YoY, with distributor presence increasing by 60% and active towns by 73%, indicating successful channel expansion efforts.

Despite the volatility in commodity prices, the company maintained its working capital days in the range of 45-50 days, indicating efficient capital management. To mitigate potential risks from price reversals, particularly in the specialty oils division, APAR strategically degrew its total inventory. This proactive approach helps limit exposure to adverse market movements and ensures financial discipline.