Apar Industries - Q1FY21 Result Update - YES SECURITIES

Apar Industries - Q1FY21 - BUY (Target Rs360, Upside 18%)

Apar Industries reported a topline de-growth of ~35% yoy during Q1 FY21 primarily due to national lockdown in Apr'20 which impacted domestic sales. Delays in execution at Customer end due to labor issues and logistical challenges impacted business. While the Conductor segment reported 31% decline in revenues, Oil and Cables segment reported de-growth of ~43% and ~37% respectively. The decline across segments was due to COVID-19 impact. Exports, however grew 11% yoy and share of exports rose to 47% in Q1 FY21 (27% in Q1 FY20). Overall margin on consolidated basis declined 397 bps yoy (to 2.9%) primarily due to COVID related costs and higher overhead expenses. During the quarter, the Company received new orders worth ~Rs.3.2 bn in conductor segment. New order inflows were significantly lower yoy with delays in awarding new tender due to postponement of meetings at government authorities end.

Considering the significant COVID impact across all the segments, we cut our estimates for FY21 and FY22. We believe, the Company would witness only gradual pick up in supplies going forward. Increasing share of value added products to support profitability. We maintain our BUY rating on the stock for revised target of Rs.360.

Source : Equity Bulls

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