Apar Inds.

Apar Industries reported a consolidated revenue of ₹5,480 crores for Q3 FY26, marking a 16.2% year-on-year increase. Domestic revenue demonstrated strong growth at 30% YoY in Q3 and 26.9% for the nine-month period. Consolidated EBITDA grew by 20.4% YoY to ₹483 crores, achieving an 8.8% margin. Profit after tax, after accounting for a ₹25 crores exceptional provision for gratuity, increased by 19.4% YoY to ₹209 crores, with a PAT margin of 3.8%.

The Conductor division's revenue increased by 25.1% in Q3, driven by a favorable product mix and higher commodity prices. The premium product mix significantly improved to 44.2% from 37.4% in the previous period, contributing to a strong EBITDA per metric ton of ₹44,195. However, physical volume de-grew by 5.9% in Q3, primarily due to delayed clearances, right-of-way issues, and transformer delivery delays caused by a shortage of bushings. The 9-month revenue for the division stood at ₹8,948 crores, up 34% YoY, with physical volume growth of 8.4%.

The Oil business recorded an 18.4% growth in revenue from operations in Q3, with overall volume growth of 21%. Transformer oil volume increased by 10.6%, automotive oil by 14.6%, and industrial lubricants by 15.7%. Exports contributed 42% to the division's revenue in Q3. For the nine-month period, revenues reached ₹4,062 crores, with volume growth of 12.3%, and domestic transformer oil business growing by 13.4%.

The Cable division's revenue grew by 7.6% to ₹1,362 crores in Q3. Domestic business showed strong performance, growing 34.6%, but exports de-grew by 44.3%, with US revenues down 65% YoY. This was largely attributed to the 54% US tariffs and the impact of Section 232. Despite margin pressure, the company strategically adjusted prices to secure approximately ₹500 crores in new orders in Q3, with a significant portion expected to be executed in Q4, to maintain market access. The 9-month Cable business grew 22.1% to ₹4,316 crores, with US revenue 44% higher than the previous year for the same period.

Apar Industries is on track with its capital expenditure plans, having completed over ₹500 crores of capex as of Q3 FY26, out of a total planned ₹1,400 crores. The remaining substantial portion of capex is expected to be deployed in Q4 FY26 and Q1 FY27, with all new facilities anticipated to be operational by mid-FY27. This expansion is aimed at increasing capacity, particularly for premium products, to meet growing demand.

The company secured a ₹153 crores order for a package in the Kavach project, focusing on enhancing security and safety in railway lines through signalling. This turnkey project, with an execution timeframe of 22-24 months, represents an initial foray into a larger opportunity in railway safety, with the government planning significant upgrades. Domestic growth is also being driven by renewable energy installations, the Indian Railways, data centers, and the defence sector, where Apar Industries is a key supplier.

Management discussed the recently announced India-EU Free Trade Agreement, noting that the specific impact on Apar Industries' cable and conductor products is still under assessment. While the deal is expected to be positive, the company needs to analyze product-specific tariff reductions (BTN numbers). Historically, access to the European market has been restricted due to local preferences, but the FTA is anticipated to provide more stability and opportunities in the long term, with current EU revenue contributing about 5% of total exports.