Any current/future new fundraising through debt or equity?

The company has issued a postal ballot notice dated September 28, 2023, seeking shareholder approval for issuance of securities, indicating a potential fundraising through equity. However, management stated they are not in a position to comment on any fund raise due to regulatory restrictions. No specific details on the size, timing, or nature (debt or equity) of any future fundraising were disclosed. Questions related to guidance, projections, forecasts, or funding requirements were declined during the call, adhering to compliance around publicity due to the ongoing postal ballot. Therefore,

Any current/future capex/capital investment/strategic investment?

APAR Industries has spent about ₹150 Crores on capex till September FY2024, mainly in the cable and conductor divisions. They plan to spend ₹350-400 Crores by the end of FY2024, expected to be close to this target in H2. The current capex will provide capacity for the next year; further guidance on future capex will be shared later. Capex lines for cable manufacturing have been commissioned and are progressing on schedule. The capex plan is based on expected new tenders and customer requirements, with a full ramp-up expected by FY2025. A ₹400 Crores capex can generate about ₹4000-5000 Crores r

Future growth expectations in sales/revenue/volumes?

Long-term demand remains strong, driven by global renewable energy goals and grid upgrades, especially in the US and Europe. Export markets, notably the US, continue to be strategic with significant opportunities from investments like the $3.5 billion US grid reconductoring plan. The current short-term de-inventorization in Western markets is tactical; fundamental demand remains intact. Capex of ~400 Crores this year aims to incrementally expand capacity, with full ramp-up expected next year, supporting 10-12 times revenue growth potential (~4000-5000 Crores). The cable business is growing ste

Future growth expectations in earnings/operating earnings/profits/EPS?

APAR Industries expects sustained long-term growth driven by increasing electricity demand and renewable energy adoption globally, targeting a rise in electricity’s share of the energy mix from 20% to 40% by 2050. Export growth, particularly in the US market, is seen as a major opportunity with 26% of revenues currently from the US and ongoing engagement with utilities and EPC players. Recent capex of about Rs. 400 Crores is expected to complete by FY2024 end, enabling revenue expansion of Rs. 4000-5000 Crores and full plant ramp-up in FY2025. EBITDA per metric ton continues to grow due

Current/ Expected Orderbook/ Pending Orders?

The conductor order book stands at approximately ₹5,900 Crores. Around 51% of the conductor order book is from exports, with the remaining from the domestic market. The cable order book is around ₹1,000 Crores. For conductors, the execution period of order books is typically about 6 to 7 months. Cable orders have a much shorter execution cycle, with less than 10% of the cable order book extending into the next year. New conductor orders in Q2 included about 43% export orders. Execution timelines indicate some deliveries stretching into the next financial year.

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Apar Industries LtdQ3 FY23Electrical Equipment

Apar Industries Ltd Q3 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹16,022P/E: 50.0Market Cap: ₹49.5K CrSector: Electrical Equipment

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Long-term demand remains strong, driven by global renewable energy goals and grid upgrades, especially in the US and Europe.
→Export markets, notably the US, continue to be strategic with significant opportunities from investments like the $3.5 billion US grid reconductoring plan.
→The current short-term de-inventorization in Western markets is tactical; fundamental demand remains intact.
→Capex of ~400 Crores this year aims to incrementally expand capacity, with full ramp-up expected next year, supporting 10-12 times revenue growth potential (~4000-5000 Crores).
→The cable business is growing steadily, with a 16% YoY revenue increase and expanding domestic footprint (now in 17 states).
→Wire business growth aligns with increased market penetration and strong distribution expansion.
→Oil division volume growth is robust at 18% YoY, supported by strong transformer oil demand.
→Overall, APAR anticipates continued volume and revenue growth driven by premiumization, market expansion, and infrastructure investments.

Margin guidance

Category 3

→APAR Industries expects sustained long-term growth driven by increasing electricity demand and renewable energy adoption globally, targeting a rise in electricity’s share of the energy mix from 20% to 40% by 2050.
→Export growth, particularly in the US market, is seen as a major opportunity with 26% of revenues currently from the US and ongoing engagement with utilities and EPC players.
→Recent capex of about Rs. 400 Crores is expected to complete by FY2024 end, enabling revenue expansion of Rs. 4000-5000 Crores and full plant ramp-up in FY2025.
→EBITDA per metric ton continues to grow due to premiumization of products and higher export mix, with a 31% YoY increase in H1 FY2024.
→Short-term tactical effects like de-inventorization may temper near-term growth but not change long-term fundamentals.
→Company maintains cautious stance on specific forward guidance due to market dynamics and regulatory constraints on disclosures.

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Fundraise plans

→The company has issued a postal ballot notice dated September 28, 2023, seeking shareholder approval for issuance of securities, indicating a potential fundraising through equity.
→However, management stated they are not in a position to comment on any fund raise due to regulatory restrictions.
→No specific details on the size, timing, or nature (debt or equity) of any future fundraising were disclosed.
→Questions related to guidance, projections, forecasts, or funding requirements were declined during the call, adhering to compliance around publicity due to the ongoing postal ballot.
→Therefore, while an equity issuance process is underway, details on any current or future fundraising through debt or equity remain undisclosed publicly as of October 26, 2023.

Order book

Yes

→The conductor order book stands at approximately ₹5,900 Crores.
→Around 51% of the conductor order book is from exports, with the remaining from the domestic market.
→The cable order book is around ₹1,000 Crores.
→For conductors, the execution period of order books is typically about 6 to 7 months.
→Cable orders have a much shorter execution cycle, with less than 10% of the cable order book extending into the next year.
→New conductor orders in Q2 included about 43% export orders.
→Execution timelines indicate some deliveries stretching into the next financial year.

Capex plans

Yes

→APAR Industries has spent about ₹150 Crores on capex till September FY2024, mainly in the cable and conductor divisions.
→They plan to spend ₹350-400 Crores by the end of FY2024, expected to be close to this target in H2.
→The current capex will provide capacity for the next year; further guidance on future capex will be shared later.
→Capex lines for cable manufacturing have been commissioned and are progressing on schedule.
→The capex plan is based on expected new tenders and customer requirements, with a full ramp-up expected by FY2025.
→A ₹400 Crores capex can generate about ₹4000-5000 Crores revenue at base level (asset turnover ratio ~10-12 times).
→There is also mention of strategic focus on supply for US markets, but no specific future strategic investments detailed.

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