PL Stock Report - Apar Industries (APR IN) - Event Update - Company to raise fund - Accumulate

Apar Industries (APR IN) – Amit Anwani – Research Analyst, Prabhudas Lilladher Pvt Ltd

Rating: ACCUMULATE | CMP: Rs5,486 | TP: Rs5,418

Event Update – Company to raise fund

Company to raise fund not exceeding Rs10bn, through Equity Shares and/or equity linked instruments, including convertible preference shares, non convertible debt instruments along with warrants, fully convertible debentures, partly convertible debentures, and/or any other securities convertible into equity shares (including warrants or otherwise), global depository receipts, American depository receipts, foreign currency convertible bonds or any combination of Securities, in accordance with applicable law.

Implication

Assuming this as fresh equity issue, there can be likely dilution of ~2.8% promoter holding (promoter holding to come down to 57.9% from 60.6%), at current market price. We believe capital raise can be utilised for further capex plan (which can be over and above the current capex plan of ~Rs3.5bn), working capital enhancement and strengthening balance sheet.

PL View

We believe, APR’s focus towards value added products and strong traction in domestic market and long term positive view on exports will drive strong topline and profitability in the long run. The stock is trading at PE of 35.8x/28.8x FY24/25E. We have Accumulate rating on stock with TP of Rs5,418, valuing Conductors/Cables/Speciality Oil segment at 25x/32x/12x Sep25E.