Apar Inds.

Apar Industries reported a robust Q2 FY26, with consolidated revenue growing 23.1% YoY to ₹5,715 crores and PAT increasing 30% to ₹252 crores. The consolidated EBITDA post forex for the quarter stood at ₹499 crores, marking a 24% YoY increase with a margin of 8.7%. The first half of FY26 achieved a significant milestone, with consolidated revenue crossing ₹10,000 crores for the first time, reaching ₹10,820 crores, representing a 25% YoY increase. H1 EBITDA post forex was a historically high ₹1,000 crores, up 25.5% YoY, with a margin of 9.2%.

The conductor division delivered a strong performance in Q2 FY26, with revenue growth of 34.9% YoY and volume growth of 16.2%. This was significantly supported by a premium product mix, which contributed 45.4% of the division's revenue. Exports surged by 74.6% YoY, accounting for 24.2% of the overall revenue. The EBITDA post forex for the division grew 21.4% to ₹248 crores, with EBITDA per metric ton improving to ₹39,636, up from ₹37,702 in the prior year, reflecting the favorable product mix and strong US business.

The cable division posted a strong revenue growth of 25.1% in Q2 FY26, reaching ₹1,535 crores. Exports were a key driver, with the export mix increasing to 42.3% from 29% in Q2 FY25, and US revenues growing 121.2% in H1. The division's EBITDA post forex recorded a 32% YoY growth to ₹157 crores, and the EBITDA margin expanded by 50 basis points to 10.2% compared to the previous year. The pending order book for the cable division stands at ₹1,836 crores.

The US market, particularly for renewable energy projects, remains a significant growth area, with H1 US revenues for conductors and cables already exceeding ₹1,600 crores. However, the imposition of Section 232 tariffs (50% duty on metal content) led to a near complete halt in order inflow from the US during August-September, impacting Q3 revenue booking. Management anticipates a recovery in order inflow and revenue recognition from Q4 FY26, driven by time-bound IRA incentives for renewable projects, despite new orders coming in at potentially lower margins.

The domestic market is expected to pick up in H2 FY26, traditionally a stronger period due to fewer weather-related issues. However, Q3 faces short-term challenges from right-of-way issues and a shift to milestone-based billing for government projects, which has temporarily slowed material offtake. Management expects a strong construction season from November to March, which should accelerate conductor and cable demand, particularly given the existing backlog in substation additions that will drive demand for transmission lines.

Apar Industries is proactively investing in capacity expansion, with a planned Capex of ₹1,300 crores for FY26 across all divisions, of which ₹400 crores has been spent in H1. The ₹800 crore cable capex is projected to increase revenue generating capacity by ₹6,000 crores, from ₹5,000 crores to ₹10,000 crores, with bulk commissioning expected by June 2026. This advance investment in fungible equipment and new factory facilities aims to support sustained growth for the next two years and beyond, ensuring readiness for increasing demand.

Management highlighted reconductoring as a significant and strategic opportunity for India's power sector. This method is considerably cheaper and faster than building new lines, requires no new right-of-way, and can increase power throughput by 150-200% with optimal design. Given India's resource constraints and the growing energy demands from data centers, reconductoring is seen as the best way to upgrade the grid. The government is actively developing a reconductoring plan as part of its 500 GW renewable energy blueprint, which Apar is well-positioned to capitalize on.