Apar Inds.

Apar Industries reported a consolidated revenue of INR 4,716 crores in Q3 FY25, marking a 17.7% year-on-year increase. This growth was primarily driven by a strong 31.8% YoY increase in domestic revenue, with continued focus on Transmission & Distribution (T&D) renewables and railway projects. Exports contributed 33.5% to the overall revenue, a decrease from 40.7% in the prior year, but still grew by 14.3% YoY. For the nine-month period, consolidated revenue reached INR 13,371 crores, up 14.3% YoY, with domestic revenue higher by 44.8%.

Despite robust revenue growth, Q3 FY25 saw a decline in profitability. EBITDA was INR 401 crores, down 7.1% YoY, with an EBITDA margin of 8.5%. Profit after tax (PAT) fell by 19.7% YoY to INR 175 crores, resulting in a PAT margin of 3.7%. This margin compression is attributed to a shift in business mix from more profitable exports to the domestic market, which offers lower margins. Additionally, short-term impacts from increased freight costs due to Red Sea issues and competitive pricing in the domestic market contributed to the pressure.

The Conductor business revenue grew by 23.4% YoY in Q3 FY25, with volumes up 19%. Exports contributed 25% to the segment's revenue, down from 40% a year ago. The premium product mix contribution was 37.4%. The EBITDA per metric ton for conductors was INR 29,593, lower than INR 41,500 in Q3 FY24, primarily due to a lower premium product execution and a shift in geographic mix. The segment holds a healthy order book of INR 7,600 crores, with new orders of INR 3,077 crores received during the quarter, a 62.3% increase YoY.

The Cable business demonstrated strong performance, with revenue growing 37% YoY to INR 1,266 crores in Q3 FY25, driven by robust domestic demand. Domestic revenue increased by 30.4%, while the export mix stood at 34%. EBITDA for the cable segment was INR 122 crores, up 14.2% YoY, though the EBITDA margin was 2% lower than the previous year. The company is implementing a strong Industry 4.0 program, aiming to connect over 400 machines by March end to enhance productivity and optimize costs, especially in the competitive domestic market.

The US market, a key focus for Apar, showed signs of recovery with billing increasing by 8.5% sequentially in Q3 FY25. Management noted that the excess stock in the US market is now behind them, and inquiry levels are increasing. The company is actively working on securing utility approvals in the US, which is a stringent and time-consuming process, to expand its customer base and capitalize on the approximately $20 billion per annum cable market, where 50% of demand is imported.

There has been a slowdown in the execution of government-planned transmission lines and substation capacity additions. For the April-December period, only 50% of planned transmission lines and 65% of planned substation capacity were added. This is largely due to tenders being retendered because initial bids exceeded budget values, influenced by rupee depreciation and commodity price movements. Management expects this pace to pick up as these projects are essential for the growing power demand and renewable energy integration.

As of December end, the company reported short-term debt of INR 120 crores and long-term debt of INR 330 crores. Interest-bearing acceptance stood at INR 2,500 crores, with total LCs at INR 3,300 crores. Despite a reduction in acceptance levels due to working capital optimization, interest costs increased in Q3 FY25, primarily due to the reclassification of exchange rate fluctuations (INR 85/dollar) to finance costs and higher interest on discounted receivables. Capex for the nine-month period was INR 270 crores, with the FY26 budget currently being finalized.