Apar Industries — a record year threaded through the tariff needle

The State of Play

Apar closed FY26 with all-time-high revenue of ₹22,902 crore, up 23%, and net profit of ₹977 crore — a year in which its biggest export market, the US, went from boom (pre-tariff buying) to a two-month standstill (Section 232’s 50% metal duty) to a 250% sequential rebound in the final quarter, exactly as management said it would on the January call. Conductors crossed ₹10,000 crore of revenue for the first time and earned ₹43,012 per tonne against a standing guidance of ₹30,000 — a beat so persistent that management finally raised the guidance to ₹35,000–36,000 in May. The next phase is bought and paid for: ₹1,500 crore of FY27 capex, most of it doubling cable capacity toward a ₹10,000 crore cable business.

The Company

Founded by Dharmsinh D. Desai in 1958, Apar makes the hardware that moves electricity: it is the world’s largest conductor manufacturer (the wires strung on transmission towers, from conventional ACSR to premium high-temperature low-sag reconductoring lines and copper transpose conductors), one of the world’s biggest transformer-oil blenders, and a fast-growing power and telecom cables business that this year overtook oils as the second-largest segment. The customers range from Power Grid and state utilities to windmill OEMs, Vande Bharat trains (~90% supply share via Medha), US data-center projects, and the HVDC transformer programs of Hitachi Energy, GE and Siemens — where Apar says it is so far the only oil supplier.

The model is volume-heavy and margin-thin by design — metal prices are fully hedged and passed through, so Apar earns a conversion spread (tracked as EBITDA per tonne for conductors, per kilolitre for oils) on enormous throughput. Operating margin runs ~8–9%. The decade’s arc: flat from FY15–FY21 (sales stuck at ₹5,000–8,000 crore), then a 2.5x explosion from FY22 as India’s transmission capex and the global electrification wave hit, with net profit quadrupling to ₹977 crore. Brothers Kushal and Chaitanya Desai run the business; promoter holding has been parked at exactly 57.77% for eight quarters, with DIIs building from 18% to 24% as retail exits. The stock trades at 56x earnings and 10x book — screener’s two flags, along with a rising cost of borrowing.

The Story So Far

Q1 FY26 (call: July 29, 2025) — the pre-tariff sugar rush

Revenue rose 27% to ₹5,104 crore with PAT up 30% — flattered by US customers pre-buying ahead of the August 1 tariff change (US cable revenue up 136%). Conductors did the heavy lifting: revenue up 44%, premium mix at 43.5%, and EBITDA per tonne at ₹43,688 against the standing ₹30,000 guidance, which the CFO pointedly declined to raise: “currently we would like to maintain it at 30,000 plus the tailwinds.” The tariff arithmetic got its first airing — India’s ~15% landed cost on finished product versus Section 232’s 50% on raw metals — along with the policy that would define the year: for all new orders, tariffs are a separate line item on the customer’s account. “We are not taking on any more tariff risks for new orders” — Kushal Desai. Guidance: 10% conductor volume growth, 25% cable value growth, ₹1,300 crore of capex by June 2026.

Q2 FY26 (call: October 30, 2025) — records, then a two-month freeze

The first half crossed ₹10,000 crore of revenue for the first time, with ₹1,000 crore of EBITDA; H1 US revenue alone matched all of FY25’s (~₹1,600 crore). But the call’s real news was a warning delivered with unusual precision: Section 232 had been expanded overnight to ~400 product categories covering most of Apar’s US line, US order inflow had “almost completely stopped” through August–September, and because new US orders ship on DDP terms (revenue recognised on delivery), Q3 would be squeezed on both revenue and profit, with the recovery landing in Q4. Orders had already restarted “in a whole spate” after Diwali. Everything else held: conductor guidance still ₹30,000/MT (actual: ₹39,636), cable margins 10–12%, and the ₹800 crore cable expansion confirmed to lift cable revenue capacity from ₹5,000 to ₹10,000 crore by mid-2026. Domestically, the mismatch was stark — substation additions up 74%, but transmission-line commissioning 27% behind the prior year on right-of-way delays — pent-up demand, in management’s reading.

Q3 FY26 (call: January 29, 2026) — the squeeze, on schedule

It played out as scripted: exports fell 11%, US cable revenue fell 65%, and revenue growth slowed to 16% — yet domestic revenue rose 30% and carried the quarter, with PAT up 19% even after a ₹25 crore one-time gratuity provision under the new labour code. The startling number was conductor profitability: ₹44,195 per tonne, on a premium mix of 44.2% (versus 37.4% a year earlier) and the market-wide shift from ACSR to higher-priced AL-59. Conductor volume, though, fell 5.9% — utilities couldn’t take delivery because a transformer-bushing shortage had stalled substation completions (Chinese bushing imports were being permitted “within the next week or so”). The forward promise was specific: ~₹500 crore of US orders booked in Q3 would bill in Q4. A new business arrived — a ₹153 crore Kavach railway-signalling turnkey order, against a stated ₹40,000–50,000 crore national opportunity.

Q4 FY26 (call: May 28, 2026) — delivery, and a bigger bet

Q4 delivered the promised snap-back: revenue ₹6,603 crore (+27%), US revenue up 250% sequentially, conductor revenue at an all-time high with premium products at 49.3% of mix and EBITDA per tonne at ₹44,919. Full-year FY26: revenue +23.3%, conductors +32.7% (crossing ₹10,000 crore), cables +25.8% (overtaking oils), order inflow of ₹11,450 crore in conductors alone. The guidance finally moved:

“From a medium to long-term perspective, our conductor margins could be in the range of INR35,000 to INR36,000 per metric ton… plus the tailwinds coming our way.” — Ramesh Iyer, CFO (the ladder: ₹8,000–10,000 → ₹30,000 → ₹35,000–36,000)

Capex was raised, not trimmed: ₹1,500 crore for FY27 (₹850 crore of it cables) on top of FY26’s ₹740 crore actual spend — the original “₹1,300 crore by June 2026” plan having slid right but grown in total. The tone on the US turned constructive — tariffs “settled down… here to stay,” which ends the decision paralysis, and the aluminium asymmetry (the US imports ~90% of its aluminium, so everyone pays the duty) keeps Apar’s largely aluminium-based exports viable: “with tariffs, we will grow significantly in FY27 over FY26 as far as the U.S. market is concerned.” The new worry list was equally concrete: the Middle East war freezing transformer-oil shipments to Saudi/Kuwait in March–April, metal and polymer inflation deferring domestic deliveries, Chinese subsidy-priced competition in third markets, and new domestic entrants (UltraTech, Adani) in wires — dismissed as building-wire players, not specialty competitors.

The ledger: said vs. delivered

Kept, precisely: the Q3-squeeze-Q4-recovery call from October — among the cleanest pieces of forward guidance in this batch, down to the ~₹500 crore of US Q4 billing; cable growth (25.8% vs 25% guided); cable margins (10.2% vs 10–12%); the no-tariff-risk policy (CFO: “no net impact on our profitability” from duties, which were billed back to customers). Beaten so badly it forced a re-guide: conductor EBITDA/MT — ₹43,012 for the year against ₹30,000 guided, with the guidance raised only after four consecutive quarters of ~₹40,000+. Missed, narrowly: conductor volume — 8.6% versus the original 10% (bushing shortages and right-of-way delays; management trimmed to 8–9% in January and promised double-digit in FY27). Slid: the capex schedule — ₹1,300 crore by June 2026 became ₹740 crore spent in FY26 with the balance (and more) rolled into a bigger ₹1,500 crore FY27 plan. The house style is now legible: conservative unit-economics guidance held long past the point of being beaten, and candid, specific pre-announcement of bad quarters.

Where Things Stand

FY27 starts with conductor order books at ₹7,671 crore (over half premium), cable capacity doubling toward ₹10,000 crore of revenue by FY28, a US business management expects to grow “significantly” now that tariffs are stable, and HVDC orders — both oil and conductors — due to flow as awarded projects move to execution through FY27–28. The headwinds are mostly external and priced in metal: aluminium and copper near highs, war-inflated freight, polymer shortages in specialty cables, and Chinese competition wherever subsidies reach. The structural question is whether an 8% operating margin business that has rebuilt itself around premium products (reconductoring, CTC, data-center cable) can keep lifting its conversion spread faster than competition and commodity costs erode it — FY26 said yes, emphatically; the new ₹35,000–36,000/MT guidance is the first time management has put that on paper.

The Four Checks

1. Quality and moat. A well-run business with a real but narrow edge, not a fortress. The moat is scale and qualification: world’s largest conductor maker, claimed sole oil supplier to the HVDC transformer programs of Hitachi Energy, GE and Siemens, ~90% share of Vande Bharat cable supply, and a premium mix (HTLS reconductoring, CTC, data-center cable) now at 49.3% of conductors. But the underlying model is a conversion spread on hedged metal — operating margin runs 8%, and the spread is contestable: Chinese subsidy-priced rivals in third markets, UltraTech and Adani entering wires at home, and a per-tonne economics that competitors can chase the moment ₹44,000/MT becomes visible. Call it niche leadership in a commodity-adjacent trade — durable while the premium mix stays ahead of imitation, not structurally protected.

2. Returns on incremental capital and runway. Genuinely strong, off a cyclical peak. ROCE printed 51% in FY23 and has normalised to 31.1% in the June 2026 snapshot, with ROE at 20.2% — still comfortably above any sensible hurdle, but the direction is down, and OPM has slid from 10% (FY24) to 8% as revenue scaled. The runway is real and specific: ₹1,500 crore of FY27 capex, cable capacity doubling toward ₹10,000 crore of revenue by FY28, HVDC orders due through FY27–28, and a US business management expects to grow “significantly” now that tariffs have settled. The caveat is that the runway rides one cycle — global electrification capex — and reinvestment economics will track it.

3. Capital allocation for the stage. Rational and boring, in the good sense. Management has reinvested hard exactly when returns were high — FY26 capex of ₹740 crore stepping to a ₹1,500 crore FY27 plan, ₹850 crore of it into cables, the segment growing fastest — while paying a steady 22–27% of earnings out as dividend through FY25 (FY26 shows 0% in the snapshot, likely not yet declared). No buybacks are visible in the data, no dilution (share count flat across the decade), no acquisitions of note; borrowings rose from ₹359 to ₹956 crore, modest against ₹5,353 crore of reserves, though screener flags the cost of that borrowing as high. The only quibble is the capex schedule sliding — ₹1,300 crore by June 2026 became ₹740 crore spent — which is a delivery issue, not a discipline one.

4. Price. Demanding. As of the June 2026 snapshot, the stock trades at ₹14,100 — within 1% of its 52-week high and more than double the 52-week low of ₹6,800 — at 56.6x earnings, 10.4x book and a 0.37% dividend yield. That is a multiple normally reserved for structurally protected compounders, paid here for an 8%-margin metal converter whose ROCE is normalising downward and whose record year leaned on a once-in-a-generation transmission capex cycle. The growth is real and the order book (₹7,671 crore in conductors, over half premium) supports another strong year, but at this price the market has prepaid for FY27 and a good part of FY28; any stall in the cycle, the conversion spread, or the US recovery has no cushion under it.

Sources

• Concall transcripts (4): Q1 FY26 (Jul 29, 2025), Q2 FY26 (Oct 30, 2025), Q3 FY26 (Jan 29, 2026), Q4 FY26 + full-year (May 28, 2026) — BSE filings, converted to markdown. The Q4 transcript is truncated at page 16 of 17 (final answer on a competitor’s PGCIL approval is incomplete).
• Annual reports (3): FY23 (the breakout year: revenue +54%, conductors’ profit 4x), FY24, FY25 sections.
• Screener.in snapshot: consolidated quarterly and annual tables, ratios, shareholding — fetched 2026-06-05 (logged-out session).
• Research files: vault/Sources/Earnings/Apar Industries Ltd/ — raw transcripts, AR sections, snapshot, per-document digests (not published).