From ₹1,200 to ₹5,801: This midcap stock surges 383% in a year

Apar Industries is one of the midcap stocks that have given multibagger returns to its shareholders in the last one year. The share price of Apar, a global manufacturer of conductors, cables, speciality oils, lubricants, and polymers, has surged from ₹1,200 apiece to ₹5,801 levels in the last one year, delivering 383% returns in this time period.

On Tuesday, Apar Industries shares opened higher for the third straight session and gained as much as 6.8% to hit a fresh all-time high of ₹5,801.2 in intraday trade on the BSE. The stock breached its previous record high of ₹5,740 touched in intraday trade on September 20, 2023. The stock hit its 52-week low of ₹1,200 on September 29, 2022.

Apar Industries shares got a boost today after the company in a post-market release on Monday said its board would consider fund raising in its meeting on September 28, 2023.

“The meeting of the board of directors of the company is scheduled on September 28, 2023, inter alia, to consider and approve a proposal for raising further capital and to create, offer, issue and allot such number of equity shares and equity linked instruments or securities… through public and/or private offerings and/or by way of qualified institutions placement, and / or preferential allotment and / or through any other permissible mode,” Apar Industries said in a BSE filing.

With a market capitalisation of ₹21,876 crore, the midcap stock has risen in seven out of the last eight sessions and gained more than 19% during the same period.

In the calendar year 2023, Apar Industries, one of the largest manufacturers of aluminium and alloy conductors in the world, has zoomed 218% as compared to a nearly 27% rise in the S&P BSE Midcap index and over 8% growth in the BSE Sensex.

The counter has surged 148% in the last six months, 79% in three months, and nearly 13% in a month. In comparison, the S&P BSE Midcap index rose 36%, 14%, and 27%, respectively, during the period under review.

On September 22, CARE Ratings upgraded the ratings of long term bank facilities of Apar Industries Limited (APAR) from “A” to “A+”. The outlook has also been revised to ‘stable’ from ‘positive’. The rating for short term bank facilities was kept unchanged to “A1”.

“The stable outlook reflects that scale and operating margins will continue supported by healthy order book and its strong market position in conductors and specialty oil segment with increasing share from premium products in the near to medium term,” the report noted.

The domestic brokerage, in its report, said revision in the ratings factored in strong improvement in operating performance with 53.9% growth in the total operating income in FY23, led by increased volumes sold and premiumisation of product mix across segments. Its business segments comprise conductors, transformer oils and specialty oils (TSO), and cables, which contributed 47%, 31%, and, 22%, respectively, to the gross sales of FY23.

“The ratings continue to factor APAR’s established and leadership position in conductors and TSO segments, diversified revenue streams product-wise and geographically, with exports contributing 48.7% in FY23, long-standing experience of the promoters and healthy growing order book which stood at ₹5,356 crore for the conductor division and ₹930 crore for the cables division as on June 30, 2023,” CARE said in its report.

In FY23, export revenue increased by 97% YoY backed by an improved mix of premium products. Segment-wise, cable increased by 64%, conductors segment increased by 67%, and the TSO segment grew by 31% on a yearly basis.

In Q1FY24, the revenue increased by 22% YoY to ₹3,773 crore, led by higher volumes with 92.1% increase in the cable division exports and 57.7% increase in the conductor segment. The upgrade also factors improvement in the debt coverage metrics, improved interest coverage and lower net debt/EBITDA at 3.13x (PY: 4.82x) as on March 31, 2023.

Established in 1958, Apar Industries, formerly known as Power Cables Private Limited, R is amongst the top three producers of conductors and speciality oils in the world. It is engaged in the manufacturing of TSO and transmission & distribution overhead conductors with a total installed capacity of 542,000 KL and 180,000 MT, respectively, as on March 31, 2023. In the conductor division, APAR caters to prominent customers like Power Grid Corporation of India, various state government entities, Larsen & Tuobro, and turnkey operators with whom it has a long-standing relationship. APAR also exports to major geographies with focus on Australia, South East Asia, Middle East, Latin America, North America and Africa among others and has presence in more than 140 countries.

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