Apar Industries (APR IN) – Management Meet Update – Demand remains resilient, geopolitics a near term watch – Downgrade to ‘Accumulate’

We interacted with the management of Apar Industries (APR) to assess the potential impact of the ongoing US-Iran geopolitical tensions, domestic demand environment and the company’s overall business outlook. The management indicated that the situation remains fluid, though the company’s direct exposure to the Middle East is limited (~6–7% of total revenue) and operations remain unaffected given adequate raw material inventory and incoming supplies although if situation worsen it could increase the shipping cost, insurance and commodity volatility. Management reiterated guidance of ~Rs30,000 and tailwinds EBITDA/mt with ~10% volume growth in conductors, supported by premium product mix, capacity expansion and sustained demand from the US driven by grid modernization and renewable integration. The cables business continues to remain a key growth driver, with ~20%+ YoY growth and ~11% EBITDA margins expected in medium term, aided by capacity expansion (~Rs8bn capex), better product mix and operating leverage. Demand visibility remains strong driven by power T&D, renewables and industrial electrification, while emerging opportunities in data centres—where cables account for ~4–5% of project capex—provide an incremental growth lever over the medium term. The stock is trading at a P/E of 31.0x/26.0x on FY27/28E earnings. We downgrade our rating to ‘Accumulate’ from ‘BUY’, factoring in near-term geopolitical tensions and resulting uncertainty. We continue to value the Conductors, Cables and Specialty Oils segments at PE of 34x/34x/12x Sep’27E (same as earlier) arriving at SoTP-derived TP of Rs9,629 (same as earlier).