Thread by @Omkar_N_17

My first thread on twitter on any business till now. There is no better occasion than #GaneshChaturthi to start something new.

Trying to cover #AparIndustries

1/n

Apar Industries is founded in 1958 by Mr. Dharmsinha D Desai. Third generation of founder is running the business.
Company started with conductor business 6 decades back and now it is mainly into 3 segments: Speciality oil and lubricants, Conductors and Cables.

2/n

Company claims it is the only company to have all these three divisions at such a large scale.
Company is focused on in-house R&D and have stated that it will continue to do so to remain ahead of the competition.

3/n

With presence over 140+ countries. Focus is on Southeast Asia, Middle East, South America & Africa. Plants are strategically located near ports.
Company serves industries like Rail, Defence, telecom, Shipping, Mining, Pharma, Rubber, Plastic etc. Shows wider customer base.

4/n

Company’s products are mainly for transmission of electricity, with multiple lines of product lines in all 3 divisions segments i.e., in Oil and lubricants, Conductors and in Cables.
Largest global aluminium and alloy conductor manufacturer.

5/n

Third largest manufacturer of transformer oil globally.
Number one in renewable cable products.
Sales growth for 5 years is 14.1% CAGR and company has clocked 9346 Cr of revenue in FY22.

6/n

Company have three plants for oil division, two each for conductor and cable. A plant in Sharjah is in trade free zone. Company have 8 plants in total.
Company has posted strongest revenue quarter with revenue up 71%, EBITDA 73% and PAT 97% up YoY basis.

7/n

In terms of products: Conductors contributes 45% followed by speciality chemicals 27%, cables 20% and rest by lubricants and other products.

First, we will go through Conductor business which contributes highest to the company’s revenue.

8/n

Capacity: 1.8 lakh MT pa. 1 of the first company to successfully test 765kV & 800kV conductor successfully. Company have invested 343 Cr in FY16 in this segment.
Now focus is on higher value products. Which contributes 49% of the revenue as against 33% in previous FY.

9/n

In Q1 revenue is up by 128% YoY. Volume have grown by 64% rest by price hike. And company is also able to pass on prices to the customer in this segment.
Q1 Segmental profit margin have improved to 5.5% from 4% (unadjusted. Adjusted 5.1% vs 3.5%) YoY bsis.

10/n

EBIDTA per MT for conductor is at record high of 23,670Rs which was 12,364 Rs last year. Increase in the EBIDTA is backed by improved product.
Total order book stands at 3647Cr which includes new order inflow of 2017 Cr. 54% of the order book is for premium products.

11/n

Segment 2- Speciality oils and lubricants:
60% market share in power transformer and 40% in distribution transformer. Manufactures 400+ different types of specialty oils. Set-up new R&D facility at Rabale plant. It has expanded transformer oil capacity and range.
12/n

Segmental revenue is up by 28% YoY basis. But only marginal growth in volumes (0.8% YoY basis).
EBITDA per KL have improved 31% from 7814 Rs to 10,238 Rs per KL.
Company expects margin erosion in the Q2 mainly due to inventory loss.

13/n

Segment 3- Cables:
Largest and most innovative Indian supplier to the nuclear power energy. 60% market share in domestic wind sector. Products: MV & LV XLPE cables, fibre optic cables & speciality cables. Company did debottlenecking of HT & LT cable capacity.

14/n

Segmental revenue is up by 60% YoY as all sub-segments performed well except OFC.
EBITDA is up 95%, margins improved to 7.6% from 6.2% YoY.
Focus on export which accounts 43% vs 19% YoY.
Company is expecting continuous volume growth for the rest of the year in this segment
15/n

Overall view on company: Company is focusing on change in customer mix with brand and products appealing to the customers, improved efficiency, targeting high growth markets. Diversification with focus on premium offering, innovation and expanding capacities.

16/n

Company have started purchasing raw material in bulk, ensuring high quality, low cost and timely delivery to the customers.

17/n

Key growth drivers:
1.Global infra spend and rise in power spending.
2.China+1
3.Carbon neutrality: Global trend is to adopt renewable energy and Apar is pioneer with highest market share.

18/n

Now to valuation: In 2017, company used to trade at PE multiple of 24. This quarter company have posted highest quarterly results in all aspects and is still trading at PE multiple of 16. Company's peers KEI industries is trading at PE multiple of 30.

19/n

Some insights from @nid_rockz because of whom I got to know about this company.


Inspired from @ishmohit1 @soicfinance @sahil_vi @Atulsingh_asan & thanks for continuous knowledge sharing.

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