Multibagger stocks are common, but only a few can sustain their rapid rise. As markets stabilise and the froth subsides, stocks that grow multifold dramatically usually return to their true worth. Apar Industries is an exception: the small-cap share has managed to hold onto its gain and looks well-positioned for further moves.
Apar Industries: Overview
Apar Industries is a small-cap stock in India. It has a market capitalisation of ₹10,745 crores, per Tickertape, and specialises in aluminium and alloy conductor manufacturing. The company is the largest aluminium and alloy conductor manufacturer worldwide as well as the third-largest transformer oil maker.
It operates in the diverse electrical and metallurgical engineering fields, offering value-added products and services in power transmission conductors, petroleum speciality oils, and power and telecom cables.
Apar Industries has over 350 grades of speciality oils and the largest range of speciality cables, lubricants, speciality automotive and polymers.
Strong fundamentals
One of the reasons Apar Industries is a solid stock to invest in is its strong fundamentals. In the quarter gone by, i.e., Q3 FY23, the company reported ₹170 crores consolidated net profit. It signifies a 209% rise as Apar Industries reported a net profit of ₹55 crores in the same quarter last fiscal.
It also performed well on the topline front. The consolidated revenue from operations came at ₹3,942 crores, increasing 76.85% from ₹2,229 crore in the year-ago period.
Apar Industries’ conductor segment is the main revenue stream. It saw an increase of 103.23% to ₹1,911 crore in Q3FY23, compared to ₹940.3 crore in Q3FY22. The revenue from the transformers and speciality oils segment came in at ₹1,245 crores, an increase of over 37% YoY. Margins expanded 360 basis points yearly, signifying strong competitive strength and demand for the company’s products.
Since Apar Industries operates in the engineering and manufacturing space, it has significant room for growth given the Indian Government’s focus on improving railway, defence, and renewable energy infrastructure.
Technical view – is it a buy?
Apar Industries’ current share is ₹2,837.75, implying a PE of 41.86. While it seems expensive, the sector PE is more than 50. Going by the charts, it looks solid and mutual funds and FIIs (Foreign Institutional Investors) have a steady holding pattern. The stock has delivered over 50% return this year, but nothing in the charts suggests it cannot move further.