Today we know about the world's leading conductor manufacturer company that has been in operation for more than 60 years. The company not only operates in this segment but is now one of the most diversified businesses in India. Its name is Apar Industries Ltd.
Its leadership seems to follow the principle of "Never putting all your eggs in one basket." So, let’s learn more about this company and discover the key strengths & weaknesses of Apar Industries. Let's begin with the company's history to understand its core.
The Rich History of APAR Industries Ltd
The company was originally founded in 1958 by Shri Dharamsinh D. Desai with the name of Power Cables Pvt. Ltd. Its main focus was manufacturing transmission conductors.
But his vision is to grow limitless, so he renamed the company using the Sanskrit word "APAR." The philosophy behind the name stands for:
Ascending Passionately, Achieving Responsibly.
The company quickly expanded into other industries. In 1959, it ventured into specialty oils; in 1999, it debuted in cable manufacturing; and in 2010, it began manufacturing lubricants.
Today, along with its leadership position in conductor manufacturing, the company has also achieved the 3rd position worldwide in specialty oils manufacturing.
APAR Industries’s Historical Performance
The company’s main focus is consistently optimizing efficiency. As a result of this mission, the company has continuously increased its profit margin. 10 years ago, the company had only a 0.96% profit margin, but after continuous efforts, it has now achieved approximately a 5% profit margin.
This demonstrates the company’s clear vision. When someone has a clear goal and combines it with continuous effort, they become unstoppable.
Here is the company’s performance report card compared to the industry’s average performance:
| Parameters | APAR Industries | Industry |
| 5 Year Operating Profit Margin | 8.11% | 9.53% |
| 5 Year Sales Growth | 15.19% | 10.88% |
| 5 Year Profit Growth | 44.09% | 22.22% |
| 5 Year ROCE | 34.45% | 14.61% |
| 5 Year ROA | 5.65% | 4.28% |
| Debt to equity | 0.12 | 0.19 |
| Dividend Yield | 0.51% | 0.01 |
As you can see, in most key parameters, APAR Industries performs better than its peers.
In the last 3 years, APAR Industries has consistently exceeded analysts' earnings forecasts. On the other hand, the company has reduced its dividend yields and reinvested its profits to grow the business. This initiative is good for the company’s future.
From What Segment Does the APAR Industries' Earning Come The Most?
The company mainly operates in 4 sectors: Conductor, Transformer, Specialty Oils, and Power/Telecom Cables. According to a recent annual report, around 46% of its revenue comes from the Conductor business, 29% from the Transformer and Specialty Oils segments, and 24% from the Power/Telecom Cables business.
If we check the past 3 years report, the company’s Conductor business has shown the highest growth compared to other segments.
APAR Industries’ operations are also diversified across international and national markets. Approximately 55% of its revenue comes from domestic business, while 45% is generated from international markets.
Before 2019, the company primarily operated at the national level. However, due to the coronavirus pandemic, its outlook has changed significantly. APAR Industries has rapidly expanded its international market presence in the last two years, which has made all its businesses more durable, diversified, and secure.
This has also opened doors to more opportunities for the company to stand out in the market.
In Which Parameters Does The Company Lag?
1. APAR Industries' operating profit margin is low compared to its main competitors. However, in the last 7 years, the company has made significant efforts to increase it.
2. The company’s Working Capital Days are high, meaning it takes longer to convert its investments into cash, which can slow down growth and profitability.
3. APAR faces growing competition from Chinese exporters, particularly in its cables and conductors business. This external pressure can lead to reduced margins in certain markets.
4. Despite diversification, APAR Industries is heavily reliant on a few key markets. Like the slowdown in the U.S. market and competition in other regions contribute to the company’s high geographic risk.
5. As a company with significant exports, the company can experience foreign exchange risks. High fluctuation in currency could impact earnings from its international markets.
Is It a Good Time To Invest In APAR Industries?
To find out the best time to invest in any company, these are 2 methods are invented. The first involves comparing the company with its peers, and the second uses independent formulas to calculate its intrinsic value.
1. Peers Comparison Method
| Parameters | APAR Industries | Industry Avg. |
| PB Ratio | 8.75 | 9.76 |
| PE Ratio | 45.57 | 56.11 |
| PS Ratio | 2.31 | 4.84 |
| EV/EBITDA | 22.96 | 30.85 |
| M.Cap/Sales | 2.31 | 4.84 |
From the table above, we can clearly see that APAR Industries is currently trading at a lower valuation compared to its competitors. Therefore, the chances of growth in its share price are so higher than other similar companies.
In conclusion, it’s a safe time to invest in APAR Industries. Now, let’s explore the second method.
2. The Intrinsic Calculation Method
Here we gathered data from different websites including the finestimator that provides intrinsic values of the stock using different valuation formulas such as the DCF method, Benjamin Graham method, Relative Valuation method, PE Ratio method, Peter Lynch method, etc.
We only check the well-known websites that are trusted by thousands of users. Additionally, combining data from these sources helps reduce the chances of any errors.
| Website | Current Price | Intrinsic Value |
| finestimator.com | ₹9,418 | ₹5,382 |
| alphaspread.com | ₹9,418 | ₹4,862 |
| smart-investing.in | ₹9,418 | ₹1,477 |
| valueinvesting.io | ₹9,418 | ₹12,453 |
As we can see, the results from these all websites are far more different than the peer comparison Method. This doesn’t mean that these websites are wrong.
The Intrinsic Calculation Methods rely on a company’s financial performance and data to reveal its true valuation. These methods are based on mathematics, not on emotions like fear or greed.
Additionally, the current market situation is highly bullish and the overall market is overvalued. So as per the current situation, finding the undervalued stocks with the Intrinsic Calculation Method is nearly impossible.
It is better to go with the flow and use the peer comparison method to make the decision. OR you can invest in a bucket of stocks to minimize the risk with a mutual fund.
Final Words
Based on its history and business model, APAR Industries Ltd is one of the most promising companies to invest in within the stock market. Its strategic diversification and low debt highlight its stability and safety.
So if just started investing in the stock market, APAR Industries is good to go. But yes, please be mindful that the company has its own challenges such as currency fluctuations and increasing competition from China.
So APAR’s future can be different from what we predict. Invest in this stock at your own risk.
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