Apar Industries’ 90% CAGR run: Can the power sector darling keep delivering?

Source : http://www.tradingview.com

Today, it ranks among the world’s top three in conductors and is the global leader in transformer oils.

But the real story lies ahead. Apar’s current valuations no longer just reflect past execution; it also factors in the once-in-a-generation upgrade of India’s power grid. The question now is how much more juice is left in the stock.

Apar Industries and India’s once-in-a-generation grid upgrade

India’s power grid upgrade is inevitable. Rising demand from 250 GW peak in FY25 to 366 GW by FY32, rapid renewable energy capacity addition from around 220 GW today, 500 GW by 2030, and around Rs 9.2 trillion capex (2022–2032) make T&D a core theme.

The challenge now is transmission — moving power efficiently across states and cities. Renewables add complexity with solar peaking in the day, wind at night, and weather-driven variability. This requires stronger inter-regional transfer, battery storage, and smarter distribution. With around 80% of its product portfolio tied to T&D, Apar is positioned at the heart of this multi-year investment cycle.

Product portfolio: The core that keeps the grid alive

Apar’s three divisions — conductors, cables, and specialty (cooling) oils — touch nearly every part of the electricity chain, carrying high-voltage power across states, wiring homes and factories, and cooling the transformers that keep the grid running.

It runs 10 plants in India and one in the UAE, with some of Asia’s largest capacities — 4,40,000 MT conductors, 8,80,000 km cables, and 8,60,000 KL oils annually.

This scale underpins Apar’s global standing:

Global #1 in transformer oils (60% share in India’s power transformers).

Top 3 globally in conductors.

Top 5 in specialty cables in India, and among the few with electron-beam capability.

Exports span 140+ countries and contribute nearly one-third of revenues, with hubs in the UAE, Brazil, and Saudi Arabia.

Fuelling tomorrow: Capex, innovation and growth drivers

Over FY21-FY24, the company invested nearly Rs 765 crore to expand manufacturing and add premium product lines across its 10 facilities. In FY25 alone, capex rose to ~Rs 510 crore, with large spends across the three key divisions:

1. Conductor division: Rs 206 crore for new aluminium rod capacity

2. Cable division: Rs 187 crore

3. Transformer oil business: Rs 80 crore

Source : http://www.screener.in

The journey is far from over. Apar has already lined up a capex pipeline of ~Rs 1,300 crore for FY25-26.

Source: Q1FY26 Investor Conference call

From surge to stability: Apar’s financial track record

(All financials are ‘consolidated’ unless otherwise specified.)

Between FY21 and FY25, Apar’s revenue compounded at double digits and net profit margins doubled from ~2.5% to ~5%, resulting in PAT growth of around 50% CAGR. This improvement came on the back of expanding exports, higher premium product mix, and rising demand from data centres and renewables.

Source: http://www.screener.in

The recent performance, however, paints a more measured picture. In the last four quarters (up to Q1 FY26), while the conductors and cables divisions have delivered over 25% YoY growth, the transformer oil segment has largely remained flat. A part of the US-led surge was front-loaded bulk buying by customers anticipating tariff changes, making it less repeatable.

Source: http://www.screener.in

Management expects a consolidated topline growth of 10-15% with operating margins being steady at around 8.25% on a TTM (Trailing twelve months) basis, with limited scope for further expansion. With capex adding to depreciation and no near-term debt reduction, earnings growth is likely to be steady but unspectacular.

In the base case scenario, projecting forward with 10% topline growth and stable margins, EPS (Earnings per share) CAGR works out to 9% over FY25-FY28.

Source: http://www.screener.in

Note: Estimates are based on analysts’ opinion and are just one of the many ways to project future EPS.

While this keeps the company profitable and growing, it is modest when seen against the backdrop of India’s high-voltage power T&D buildout.

Valuations under the spotlight: Is the stock overcharged?

Valuations are where the caution lies. At a current P/E of ~36x, the stock trades at nearly double its five-year average of ~18x.

Source: http://www.screener.in

By FY28, even with a decent earnings growth of 10-15% CAGR, the forward P/E is expected to hover around 30x, leaving limited room for further re-rating. In effect, much of the optimism around power sector tailwinds seems to be baked into the stock price.

In comparison, Polycab and KEI, both riding the same power cables tailwind, trade at around 50X P/E but with faster earnings growth profiles.

TRIL (Transformer & Rectifiers India), though smaller, trades at a premium thanks to its HVDC (High Voltage Direct Current) positioning.

Power Grid, on the other hand, offers stability at ~17x P/E with assured dividends.

Against this backdrop, Apar sits in an awkward middle: not as fast-growing as Polycab/KEI, not as niche as TRIL, and not as defensive as Power Grid.

The tariff war with US poses another challenge in Apar’s growth story. With the US being the single largest geography for export sales (10-15% of consolidated revenue), especially for cable and conductor divisions, the jury is still out on how that will play out.

Given the above facts, it’s obvious that Apar remains a leader with strong moats and exposure to structural themes like renewables, data centres, and railways. But from a near-to-medium-term perspective, the risk-reward isn’t as compelling anymore unless growth accelerates beyond current expectations and US tariff are significantly reduced.

Note: We have relied on data from http://www.Screener.in and http://www.tijorifinance.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.

Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors. He also worked at an AIF, focusing on small and mid-cap opportunities.

Disclosure: The writer or his dependents do not hold shares in the securities/stocks/bonds discussed in the article.

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