Prabhudas Lilladher Places 'Buy' Rating On This Diversified Company

Amit Aswani, a research analyst at leading brokerage firm Prabhudas Lilladher, has reiterated its "buy" rating on Apar Industries with a target price of Rs 3,725. The firm expects the company to report strong topline and profitability in the long run, driven by its focus on value-added products and export business.

Apar Industries is a leading manufacturer of conductors and cables. The company has a strong presence in the domestic market as well as exports. It has been focusing on value-added products such as low-duty cables, elastomeric cables and specialty oils. These products have higher margins and are witnessing strong demand from the domestic and export markets.

The company has also been expanding its international footprint. It has set up manufacturing facilities in the US, Europe and South America. This will help it to tap into the growing demand for its products in these regions.

Based on its analysis, Aswani has assigned a "buy" rating on Apar Industries. He believes that the company is well-positioned to deliver strong returns to its shareholders in the long run.

Management Guidance

As per the analyst, the management has given guidance on:

1) Exports and product premiumisation will be key growth drivers in coming years

2) Conductors division is likely to witness strong traction for its conventional conductors from export markets, while the domestic market will be driven by product premiumisation

3) Cables segment, on the other hand, will continue with its growth momentum driven by strong growth in Elastomeric/E-beam cables from the renewables & defense sector and growth in B2C business

4) Speciality oil segment, is expected to witness decent growth in Transformer oil (~33% segment contribution) while growing modestly in white oil & auto lubricants

View& Rating

"We believe Apar's focus towards value-added products and strong traction in the exports business will drive strong topline and profitability in the long run. Hence, we expect revenue/PAT CAGR of 16.5%/5% from FY23-25E, amid a high PAT base," Aswani said in his note.

"The stock is currently trading at PE of 20.5x/16.3x FY24/25E. We maintain a 'buy' rating on the stock with SoTP-based TP of Rs 3,725 (Rs 3,832 earlier) valuing cables/conductors/speciality oil business at PE of 25x/21x/9x on FY25E EPS," he concluded.

Stock Price Movement

The stock price of this diversified company came down by 1.76% to Rs 2,939.05 per share on an intraday basis. In the last one year, the share price has soared by 231.09% while in the last three years, it has surged massively by 829.93%.

Disclaimer

The stock has been picked from the brokerage research of Prabhudas Lilladher. Greynium Information Technologies, the author or the brokerage house will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.