Key highlights from Apar Industries Limited (APARINDS) Q4 FY24 Earnings Concall
- Financial Performance
- Q4 FY24 consolidated revenue grew 9% YoY to INR 4,455 crores.
- EBITDA increased 3% YoY to INR 457 crores with 10.3% margin.
- PAT declined 3% YoY to INR 236 crores.
- FY24 consolidated revenue at all-time high of INR 16,153 crores, up 13% YoY.
- FY24 EBITDA grew 24% YoY to INR 1,632 crores with 10.1% margin.
- FY24 PAT increased 29% YoY to INR 825 crores with 5.1% margin.
- Industry Updates
- 14,203 circuit km of transmission lines added in FY24, short of 16,602 km target.
- Planned addition of 17,500 circuit km per year for next 3 years.
- 70,728 MVA substation capacity added in FY24, with private sector contributing 15,000 MVA.
- Renewable energy capacity addition of 18.48 GW in FY24, highest ever.
- Total installed renewable capacity at 143.6 GW, solar at 81.81 GW.
- Business Segments
- Conductors Q4 revenue up 10% YoY, EBITDA/ton at INR 48,453.
- Oils Q4 revenue up 3% YoY, EBITDA/KL up 15% YoY.
- Cables Q4 revenue up 15% YoY, EBITDA margin at 11.4%.
- Oils FY24 revenue up 4% YoY, EBITDA/KL at INR 5,746.
- Cables FY24 revenue up 18% YoY, EBITDA margin at 11.4%.
- Challenges and Outlook
- Increased competition from Chinese exporters, routing products illegally.
- Short-term slowdown in demand due to ongoing elections.
- Optimistic about long-term growth drivers in domestic and global markets.
- Capacity Expansion
- Ongoing capacity expansion as per plan of INR 350-400 crore capex annually.
- Expansions across rod making, alloying, stranding, CTC, busbars for conductors.
- Capacity additions happening continuously to maintain ~90% utilization.
- Current conductor capacity around 2.1-2.15 million tons, increasing by 10-15% annually.
- Working Capital
- Interest-bearing working capital down to ~INR 3,200 crore post QIP funds deployment.
- Working capital levels to fluctuate based on business volumes and inventory cycles.
- Quarterly interest cost expectation of ~INR 112 crore at current volumes.
- Interest to sales ratio expected to be around 2-2.5% as a benchmark.
- Demand Outlook
- Short-term US market demand expected to remain soft in current year.
- Long-term growth drivers intact, some project delays due to interest rate expectations.
- Healthy domestic demand driven by renewables, transmission lines, infrastructure.
- Conductor Growth Outlook
- Expect 15% volume CAGR over medium to long-term.
- Growth driven by new transmission lines and reconductoring projects.
- Reconductoring demand to increase due to rising power consumption.
- Export mix declined due to softness in US market last year.
- Expect export mix to improve once US demand revives.
- Conductor Profitability
- Guiding for INR 28,500/ton EBITDA over long-term.
- FY24 achieved INR 42,000/ton aided by project execution and provision writebacks.
- Margins can vary quarterly based on project mix and competitive dynamics.
- Supply-Demand Dynamics
- No acute supply chain issues currently for APAR’s products.
- Industry has increased capacity to meet growing demand.
- Short-term issues earlier during transition to AL-59 conductors now resolved.
- Cable Business Growth
- Domestic cable business grew ~80% in last two quarters.
- Driven by supplies to Indian Railways, solar, wind projects.
- LDC (B2C wires) business also grew from INR 170 cr to INR 260 cr.
- Expect 25% YoY growth in FY25 as US exports revive.
- US Market Impact
- US business ~12-13% of revenue in FY24, down from peak of 26%.
- Expects US market to remain slow in the coming year.
- Strong domestic demand offsetting US slowdown so far.
- Competition
- Facing Chinese competition in both conductors and cables business.
- Chinese more active in building wires segment (40% of US market).
- Also entering solar cables segment where company has good product acceptance.
- Some raids on distributors selling low-priced Chinese cables in US.
- Capacity Utilization
- Around 90% capacity utilization for conductor and cable divisions.
- Planning 10-15% increase in conductor capacity.
- Targeting 25% year-on-year growth in cable capacity.
- Growth Outlook
- Remains optimistic about growth drivers over next 3-5 years.
- Expects energy transition to provide opportunities domestically and globally.
- Overall positive outlook driven by renewable energy growth prospects.